SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: MARCH 31, 1999 Commission File Number 0-26582
WORLD AIRWAYS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1358276
(State of incorporation) (I.R.S. Employer Identification Number)
13873 Park Center Road, Suite 490, Herndon, VA 20171
(Address of Principal Executive Offices)
(703) 834-9200
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares of the registrant's Common Stock outstanding on April 30,
1999 was 7,137,141.
<PAGE>
WORLD AIRWAYS, INC.
MARCH 31, 1999, QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets, March 31, 1999 and December 31, 1998
Condensed Statements of Operations,
Three Months Ended March 31, 1999 and 1998
Condensed Statement of Changes in Stockholders' Deficiency,
Three months ended March 31, 1999
Condensed Statements of Cash Flows,
Three months ended March 31, 1999 and 1998
Notes to Condensed Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
WORLD AIRWAYS, INC.
CONDENSED BALANCE SHEETS
ASSETS
(IN THOUSANDS)
(unaudited)
March 31, December 31,
1999 1998
--------- ----------
CURRENT ASSETS
Cash and cash equivalents, including restricted
cash of $34 at March 31, 1999
and $22 at December 31, 1998 $ 15,196 $ 16,893
Trade accounts receivable, less allowance for
doubtful accounts of $398 at March 31, 1999
and December 31, 1998 5,226 3,285
Other receivables 3,019 2,640
Due from affiliate, less allowance for
doubtful accounts of $1,162 at March 31, 1999
and December 31, 1998 3,204 1,951
Prepaid expenses and other current assets 3,621 3,580
Assets held for sale 500 500
-------- --------
Total current assets 30,766 28,849
-------- --------
ASSETS HELD FOR SALE 1,015 1,109
EQUIPMENT AND PROPERTY
Flight and other equipment 90,148 89,878
Equipment under capital leases 12,266 12,266
-------- --------
102,414 102,144
Less: accumulated depreciation and amortization 35,335 33,433
-------- --------
Net equipment and property 67,079 68,711
-------- --------
LONG-TERM OPERATING DEPOSITS 15,869 15,855
OTHER ASSETS AND DEFERRED
CHARGES, NET 1,754 1,913
-------- --------
TOTAL ASSETS $ 116,483 $ 116,437
======= =======
(Continued)
<PAGE>
WORLD AIRWAYS, INC.
CONDENSED BALANCE SHEETS
(CONTINUED)
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
(IN THOUSANDS EXCEPT SHARE DATA)
(unaudited)
March 31, December 31,
1999 1998
--------- ----------
CURRENT LIABILITIES
Notes payable $ 6,156 $ 5,213
Current maturities of long-term obligations 7,079 7,710
Accounts payable 15,350 16,494
Unearned revenue 3,735 2,329
Accrued maintenance in excess of reserves paid 11,435 8,928
Accrued salaries and wages 8,308 6,972
Accrued taxes 2,359 2,205
Other accrued liabilities 472 1,480
------- -------
Total current liabilities 54,894 51,331
------- -------
LONG-TERM OBLIGATIONS, NET 63,823 67,569
OTHER LIABILITIES
Deferred gain from sale-leaseback transactions,
net of accumulated amortization of $21,476
at March 31, 1999 and $21,212 at December
31, 1998 3,875 4,140
Accrued maintenance in excess of reserves paid 10,498 8,460
Accrued post-retirement benefits 2,907 2,794
Other liabilities 6,819 5,770
------- -------
Total other liabilities 24,099 21,164
------- -------
TOTAL LIABILITIES 142,816 140,064
------- -------
STOCKHOLDERS' DEFICIENCY
Preferred stock, $.001 par value (5,000,000 shares
authorized; no shares issued or outstanding at
March 31, 1999 and December 31, 1998) -- --
Common stock, $.001 par value (40,000,000 shares
authorized; 12,000,064 shares issued and
7,000,064 outstanding at March 31, 1999 and
December 31, 1998) 12 12
Additional paid-in capital 42,522 42,522
Contributed capital 3,000 3,000
Accumulated deficit (31,104) (28,434)
Note receivable from WorldCorp, Inc. (1,382) (1,346)
Treasury stock, at cost (5,000,000 shares at
March 31, 1999 and December 31, 1998) (39,381) (39,381)
-------- --------
Total stockholders' deficiency (26,333) (23,627)
-------- --------
COMMITMENTS AND CONTINGENCIES
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 116,483 $ 116,437
======== ========
See accompanying Notes to Condensed Financial Statements
<PAGE>
WORLD AIRWAYS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
1999 1998
-------- --------
OPERATING REVENUES
Flight operations $ 64,942 $ 68,899
Other 384 323
------- -------
Total operating revenues 65,326 69,222
------- -------
OPERATING EXPENSES
Flight operations 19,334 16,715
Maintenance 12,697 15,572
Aircraft rent and insurance 20,086 21,268
Fuel 5,218 5,440
Flight operations subcontracted
to other carriers 619 426
Commissions 1,877 2,650
Depreciation and amortization 2,011 2,335
Sales, general and administrative 5,673 6,408
------- -------
Total operating expenses 67,515 70,814
------- -------
OPERATING LOSS (2,189) (1,592)
------- -------
OTHER INCOME (EXPENSE)
Interest expense (1,697) (1,827)
Interest income 217 382
Other, net 963 50
------- -------
Total other expense (517) (1,395)
------- -------
NET LOSS $ (2,706) $ (2,987)
======= =======
NET LOSS PER SHARE
Basic $ (0.39) $ (0.40)
======= =======
Diluted $ (0.39) $ (0.40)
======= =======
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 7,000 7,419
======= =======
Diluted 7,000 7,419
======= =======
See accompanying Notes to Condensed Financial Statements
<PAGE>
WORLD AIRWAYS, INC.
CONDENSED STATEMENTS OF CHANGES
IN STOCKHOLDERS' DEFICIENCY
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Note
Additional Receivable Treasury Total
Common Paid-in Contributed Accumulated from Stock, Stockholders'
Stock Capital Capital Deficit WorldCorp at Cost Deficiency
------- ------- ------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT
DECEMBER 31, 1998 $ 12 $ 42,522 $ 3,000 $ (28,434) $ (1,346) $(39,381) $ (23,627)
Note Receivable from
WorldCorp -- -- -- 36 (36) -- --
Net Loss -- -- -- (2,706) -- -- (2,706)
------ ------- ------ -------- ------- ------- --------
BALANCE AT
MARCH 31, 1999 $ 12 $ 42,522 $ 3,000 $ (31,104) $ (1,382) $(39,381) $ (26,333)
====== ======= ====== ======== ======= ======== ========
</TABLE>
See accompanying Notes to Condensed Financial Statements
<PAGE>
WORLD AIRWAYS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(IN THOUSANDS)
(UNAUDITED)
1999 1998
---------- ----------
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD $ 16,893 $ 25,887
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (2,706) (2,987)
Adjustments to reconcile net loss to cash
provided (used) by operating activities:
Depreciation and amortization 2,011 2,335
Deferred gain recognition (265) (264)
Provision for losses on accounts receivable -- 122
Other 78 455
Changes in certain assets and liabilities
et of effects of non-cash transactions:
(Increase) decrease in accounts receivable (3,573) 1,639
(Increase) in restricted short-term
investments -- (145)
(Increase) decrease in deposits, prepaid
expenses and other assets (55) 365
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 5,045 (4,358)
Increase in unearned revenue 1,406 205
------- --------
Net cash provided (used) by operating activities 1,941 (2,633)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to equipment and property (296) (382)
Proceeds from disposal of equipment and property 110 99
-------- --------
Net cash used by investing activities (186) (283)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in line of credit borrowing arrangement, net 943 --
Repayment of debt (4,395) (4,552)
Purchase of World Airways common stock, at cost -- (5,910)
Debt issuance costs -- (68)
Loan to WorldCorp, Inc. -- (1,750)
-------- --------
Net cash used by financing activities (3,452) (12,280)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,697) (15,196)
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 15,196 $ 10,691
======== ========
See accompanying Notes to Condensed Financial Statements
<PAGE>
WORLD AIRWAYS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Management believes that all adjustments necessary for a fair statement of
results have been included in the Condensed Financial Statements for the
interim periods presented, which are unaudited. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
These interim period Condensed Financial Statements and accompanying
footnotes should be read in conjuction with the Financial Statements
contained in World Airways' Annual Report on Form 10-K for the year ended
December 31, 1998.
2. Loss per share for the three months ended March 31, 1999 and 1998 are
computed as follows (in thousands except per-share data):
For the Three Months Ended March 31, 1999
-----------------------------------------
Loss Shares Per-Share
(Numerator) (Denominator) Amount
----------- ----------- ---------
Basic EPS
Net loss $ (2,706) 7,000 $ 0.39)
=======
Effect of Dilutive Securities
Options -- --
8% convertible debentures -- --
-------- ------
Diluted EPS
Net loss $ (2,706) 7,000 $ (0.39)
======= ====== =======
For the Three Months Ended March 31, 1998
-----------------------------------------
Loss Shares Per-Share
(Numerator) (Denominator) Amount
----------- ----------- ---------
Basic EPS
Net loss $ (2,987) 7,419 $ (0.40)
=======
Effect of Dilutive Securities
Options -- --
8% convertible debentures -- --
------- ------
Diluted EPS
Net loss $ (2,987) 7,419 $ (0.40)
======= ====== =======
3. Subsequent Events
Subsequent to March 31, 1999, $1,220,000 of the Company's 8% Convertible Senior
Subordinated Debentures (the "Debentures") were converted into 137,077 shares of
Common Stock. Consequently, as of April 30, 1999 WorldCorp, Inc. And Naluri
Berhad beneficially owned 49.8% and 17.1%, respectively, of the Company's Common
Stock, with the balance publicly traded.
In May 1999 the Company acquired $5.7 million of its Debentures at a 75%
discount from the par value of the Debentures. Consequently, the company will
recognize an extraordinary gain of approximately $4.2 million from the
retirement of debt in the quarter ending June 30, 1999. The Company does not
intend to acquire any additional Debentures at this time.
The Company has agreed to return a DC-10-30 aircraft to the lessor in May 1999.
The aircraft was originally scheduled to be returned in June 1999.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Part I, Item 2 of this report should be read in conjunction with Part II, Item 7
of World Airways, Inc. ("World Airways" or "the Company") Annual Report on Form
10-K for the year ended December 31, 1998. The information contained herein is
not a comprehensive management overview and analysis of the financial condition
and results of operations of the Company, but rather updates disclosures made in
the aforementioned filing.
The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 (the "Act"). Therefore, this
report contains forward looking statements that are subject to risks and
uncertainties, including, but not limited to, the reliance on key strategic
alliances, fluctuations in operating results and other risks detailed from time
to time in the Company's filings with the Securities and Exchange Commission.
These risks could cause the Company's actual results for 1999 and beyond to
differ materially from those expressed in any forward looking statements made
by, or on behalf of, the Company.
OVERVIEW
GENERAL
For the first quarter of 1999, the Company's operating revenues were $65.3
million, the operating loss was $2.2 million, the net loss was $2.7 million and
the loss per share was $0.39 for both basic and diluted earnings per share
("EPS"). For the comparable period in 1998 the operating revenues were $69.2
million, the operating loss was $1.6 million, the net loss was $3.0 million and
the basic and diluted EPS was a loss of $0.40.
SIGNIFICANT CUSTOMER RELATIONSHIPS
During the first three months of 1999, the Company's business relied heavily on
its contracts with the U.S. Air Force's ("USAF") Air Mobility Command ("AMC")
and Malaysian Airline System Berhad ("Malaysian Airlines"). In 1999 these
customers provided approximately 69.8% and 15.4%, respectively, of the Company's
revenues and 57.2% and 13.1%, respectively, of block hours flown. In 1998 these
customers provided approximately 59.6% and 19.7%, respectively, of the Company's
revenues and 48.1% and 20.2%, respectively, of block hours flown.
As a result of its contracts with the USAF, Malaysia and other customers, the
Company had an overall contract backlog at March 31, 1999 of $194 million,
compared to $252.1 million at March 31, 1998. Approximately $129 million of the
backlog relates to operations during the remainder of 1999. Approximately 27.3%
of the backlog relates to its contracts with the USAF and 34.6% relates to its
contracts with Malaysian Airlines.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
Total block hours decreased 567 hours, or 6.4%, to 8,342 hours in the first
quarter of 1999 from 8,909 hours in 1998, with an average of 12.0 available
aircraft during both periods. Average daily utilization (block hours flown per
day per aircraft) was 7.7 hours in 1999 and 8.3 hours in 1998. In 1999 wet
lease, or ACMI, contracts accounted for 63.6% of the block hours, a decrease
from 73.2% in 1998. The decrease in ACMI hours reflects a decrease in passenger
flying partially offset by an increase in cargo flying. Passenger ACMI flying
decreased principally due to the end of a contract with Philippine Air Lines
("PAL") in the first quarter of 1998 and a reduction in Hadj flying in 1999.
Cargo ACMI flying increased as a result of the efforts initiated in 1998 to
increase cargo business. In 1999 full service flying accounted for 34.3% of the
block hours, an increase from 24.2% in 1998, because of more flying for the
USAF.
OPERATING REVENUES. Revenues from flight operations decreased $4.0 million, or
5.7%, to $64.9 million in 1999 from $68.9 million in 1998. This decrease is
primarily due to the decrease in block hours flown in 1999.
OPERATING EXPENSES. Total operating expenses decreased $3.3 million, or 4.7%, in
1999 to $67.5 million from $70.8 million in 1998.
Flight operations expenses include all expenses related directly to the
operation of the aircraft other than aircraft cost, fuel and maintenance. Also
included are expenses related to flight dispatch and flight operations
administration. Flight operations expenses increased $2.6 million, or 15.7%, in
1999. This increase resulted primarily from an increase in full service flying
which necessitated the employment of additional flight attendants that increased
costs by approximately $1.5 million. A reduction in pilots generated cost
reductions of approximately $0.6 million. Increased AMC flying for the USAF
resulted in increased costs of approximately $1.1 million for air to ground
communications and aircraft handling.
Maintenance expenses decreased $2.9 million, or 18.5%, in 1999. This decrease
reflects the 6.4% decrease in block hours flown and an additional maintenance
accrual of $1.4 million relating to an engine overhaul in the first quarter of
1998.
Aircraft rent and insurance costs decreased $1.2 million, or 5.6%, in 1999. This
decrease resulted primarily from decreases in rent expense for the Company's
MD-11 aircraft negotiated with the aircraft lessors in 1998.
Fuel expenses decreased $0.2 million, or 4.1%, in 1999 due to a 28.5% reduction
in the average cost of fuel per gallon which more than offset a 24.6% increase
in the number of gallons of fuel consumed as a result of an increase in full
service flying in 1999.
Commissions decreased $0.8 million in 1999, or 29.2%, principally as a result of
commissions paid for Hadj flying and PAL flying in 1998 that were not paid in
1999.
Depreciation and amortization decreased $0.3 million, or 13.9%, in 1999. This
decrease resulted primarily from no amortization of MD-11 preoperating costs in
1999.
Sales, general and administrative expenses decreased $0.7 million, or 11.5%, in
1999, primarily as a result of a reduction in general insurance costs.
Non-operating income and expense, net improved by $0.9 million in 1999 primarily
because of a $1.0 million gain on the sale of a portion of the Company's
interest in an industry-owned organization.
LIQUIDITY AND CAPITAL RESOURCES
The Company is highly leveraged. At March 31, 1999 the Company's cash and cash
equivalents totaled $15.2 million and the ratio of the Company's current assets
to its current liabilities ("current ratio") was 0.6:1. Also, as of March 31,
1999, the Company had outstanding long-term debt and capital leases of $63.8
million and notes payable and current maturities of long term obligations of
$13.2 million. In addition, the Company has significant long-term obligations
relating to operating leases for aircraft and spare engines.
CASH FLOWS FROM OPERATING ACTIVITIES
Operating activities generated $1.9 million in cash in the three months ended
March 31, 1999 compared to using $2.6 million in the comparable period in 1998.
The increase in 1999 is mainly due to increases of $5.0 million in accounts
payable, accrued expenses and other current liabilities and $1.4 million in
unearned revenue that more than offset an increase of $3.6 million in accounts
receivable. The decrease in 1998 principally reflects a decrease of $4.4 million
in accounts payable, accrued expenses and other liabilities that was greater
than a $1.6 million decrease in accounts receivable.
CASH FLOWS FROM INVESTING ACTIVITIES
Investing activities used $0.2 million in cash in the three months ended March
31, 1999, compared to using $0.3 million in the comparable period in 1998. In
both periods cash was used primarily for the purchase of rotable spare parts and
computer hardware and software.
CASH FLOWS FROM FINANCING ACTIVITIES
Financing activities used $3.5 million in cash in the three months ended March
31, 1999 compared to using $12.3 million in the comparable period in 1998. In
1999 cash was principally used for the repayment of debt. In 1998, cash was used
primarily for the purchase of shares of the Company's common stock for an
aggregate cost of $5.9 million, to loan WorldCorp $1.75 million, and to repay
debt of approximately $4.6 million.
OTHER MATTERS
YEAR 2000
The Company's program to review its computer systems and address the issue of
computer programs and chips being unable to distinguish between the year 1900
and year 2000 continues to progress as planned. The Company now fully expects
that all of its hardware, operating systems and software will either be replaced
or upgraded to be Year 2000 complaint by the end of the second quarter of 1999.
Through March 31, 1999 the Company's costs have totaled approximately $120,000
and estimated additional costs to be incurred are approximately $90,000.
The manufacturers of the aircraft and engines and other aircraft components used
by the Company have provided considerable information in which they have assured
the Company that their equipment is Year 2000 compliant. However, the Company is
continuing to undertake independent actions to confirm that its aircraft are
Year 2000 compliant.
World Airways has identified its critical business partners and has requested
Year 2000 readiness statements from them. Statements have been received from
approximately 55% of those requested and the Company is continuing to seek
certification or warranties regarding Year 2000 readiness from the other.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Part I, Item 3 of this report should be read in conjunction with Part II, Item
7a of World Airways, Inc. ("World Airways" or "the Company") Annual Report on
Form 10-K for the year ended December 31, 1998. The information contained herein
is not a quantitative and qualitative discussion about market risk the Company
faces, but rather updates disclosures made in the aforementioned filing.
World Airways continues not to have any material exposure to market risks.
<PAGE>
PART IV
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits
No. Description
- ----- -----------
10.14 Employment Agreement dated April 15, 1999 between Hollis L. Harris and
the Company.
10.15 Amended and Restated Employment Agreement dated January 22, 1999
between Vance Fort and the Company.
10.16 Amended and Restated Employment Agreement dated January 22, 1999
between Gilberto M. Duarte and the Company.
10.17 Amended and Restated Employment Agreement dated April 22, 1999 between
William R. Lange and the Company.
10.18 Amendment One dated April 30, 1997 to Employment Agreement dated
October 10, 1996 between Ahmad M. Khatib and the Company.
10.19 Amended and Restated Employment Agreement dated January 22, 1999
between Serge F. Feller and the Company.
11 Computation of earnings (loss) per share.
27 Financial data schedule for the quarter ended March 31, 1999.
(b) Reports on Form 8-K
None
* * * * * * * * * * * * * *
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLD AIRWAYS, INC.
By: /s/ Gilberto M. Duarte, Jr.
Principal Accounting and Financial Officer
Date: May 10, 1999
EXHIBIT 11
WORLD AIRWAYS, INC.
CALCULATION OF LOSS PER COMMON SHARE
For the Three Months Ended March 31, 1999
----------------------------------------------
Loss Shares Per-Share
(Numerator) (Denominator) Amount
-------------- ------------ ------------
Basic EPS
Net loss $ (2,706,000) 7,000,064 $ (0.39)
===========
Effect of Dilutive Securities
Options -- --
8% convertible debentures -- --
---------- --------
Diluted EPS
Net loss $ (2,706,000) 7,000,064 $ (0.39)
=========== ========= =============
For the Three Months Ended March 31, 1998
----------------------------------------------
Loss Shares Per-Share
(Numerator) (Denominator) Amount
--------------- ----------- --------------
Basic EPS
Net loss $ (2,987,000) 7,419,000 $ (0.40)
=============
Effect of Dilutive Securities
Options -- --
8% convertible debentures -- --
----------- ---------
Diluted EPS
Net loss $ (2,987,000) 7,419,000 $ (0.40)
=========== ========= ============
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000949240
<NAME> World Airways
<MULTIPLIER> 1000
<CURRENCY> U.S. Dollar
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<EXCHANGE-RATE> 1.0
<CASH> 15,196
<SECURITIES> 0
<RECEIVABLES> 13,009
<ALLOWANCES> 1,560
<INVENTORY> 0
<CURRENT-ASSETS> 30,766
<PP&E> 67,079
<DEPRECIATION> 35,335
<TOTAL-ASSETS> 116,483
<CURRENT-LIABILITIES> 54,894
<BONDS> 0
0
0
<COMMON> 12
<OTHER-SE> (26,345)
<TOTAL-LIABILITY-AND-EQUITY> 116,483
<SALES> 0
<TOTAL-REVENUES> 65,326
<CGS> 0
<TOTAL-COSTS> 67,515
<OTHER-EXPENSES> 517
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,697
<INCOME-PRETAX> (2,706)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,706)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,706)
<EPS-PRIMARY> (0.39)
<EPS-DILUTED> (0.39)
</TABLE>
AMENDMENT NUMBER 1
TO
EMPLOYMENT AGREEMENT
This Amendment Number 1 to the Employment Agreement dated August 1, 1998,
between World Airways, Inc., a Delaware corporation and Gilberto Duarte
(hereinafter referred to as the "Agreement") is entered into this 22nd day of
January 1999.
WHEREAS, the parties desire to continue Mr. Duarte's employment, and to renew
the Agreement on different terms to modify Mr. Duarte's position, compensation
and protections in the event of a change of control.
NOW, THEREFORE, in consideration of the foregoing and other mutual
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree to amend the Agreement in its entirety as follows.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of January 22, 1999,
(the "Restated Agreement"), is by and between World Airways, Inc., a Delaware
corporation, its successors and assigns (hereinafter "World") and Gilberto M.
Duarte, Jr. ("Duarte").
WHEREAS, Duarte has agreed to serve as World's Chief Financial Officer, as of
the date hereof;
NOW, THEREFORE, World and Duarte, in consideration of the mutual covenants and
promises contained herein, do hereby agree as follows:
1. ACCEPTANCE OF EMPLOYMENT. Subject to the terms and conditions set forth
below, World agrees to employ Duarte and Duarte accepts such employment.
2. TERM. The period of employment shall be from the date first written above
through December 1, 1999, unless further extended or sooner terminated as
hereinafter set forth. No later than May 15st of each year, Duarte shall
initiate discussions with the President and CEO regarding the renewal of the
Agreement. If World does not wish to renew this Agreement at its expiration, or
wishes to renew on different terms, World shall give written notice to Duarte by
June 1st of each year. If Duarte wishes to renew this Agreement on different
terms, Duarte shall give written notice to World not later than 6 months prior
to its expiration. In the absence of notice, this Agreement shall be renewed on
the same terms and conditions for successive terms of one year from the date of
expiration
3. POSITION AND DUTIES. Duarte shall continue to serve as Chief Financial
Officer with the duties performed as of the date hereof. The President and CEO
will have reasonable latitude to made changes to Duarte's responsibilities,
except that Duarte's responsibilities may not be modified in a way that would be
inconsistent with the status of a company executive. Following a Change of
Control (as hereinafter defined), Duarte's responsibilities may not be changed
without mutual agreement. Duarte agrees to render his services to the best of
his abilities and will comply with all policies, rules and regulations of the
company and will advance and promote to the best of his ability the business and
welfare of the company. Duarte shall devote all of his working time, attention,
knowledge and skills solely to the business and interest of World. Duarte may
not accept any other engagement with or without compensation which would affect
his ability to devote all of his working time and attention to the business and
affairs of World without the prior written approval of the Chief Executive
Officer. Duarte agrees to accept assignments on behalf of World or affiliated
companies commensurate with his responsibilities hereunder, except that the
terms and conditions of assignments exceeding 60 consecutive days outside the
Washington, D.C. metropolitan area will require mutual agreement.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Duarte shall receive a minimum salary of $185,000 per
annum payable in accordance with the payroll procedures for World's
salaried employees in effect during the term of this Agreement. Duarte
agrees to participate equally, on a percentage basis, in any across the
board salary reductions approved by senior management.
(b) ELIGIBILITY FOR BONUSES. Duarte shall be eligible to receive an
annual bonus pursuant to World's 1998 management incentive compensation
plan and successor plans, if any, as the Board of Directors may adopt
from time to time. A copy of the 1998 Plan is attached as Exhibit A
hereto.
(c) PERFORMANCE STOCK OPTIONS. Duarte has been granted options to
purchase World's Common Stock, par value $.001 per share ("World
Airways Common Stock") pursuant to the 1995 World Airways Stock Option
Plan (the "Plan") as set forth in the Stock Option Agreement between
World and Duarte dated August 1, 1998 (the "Option Agreement")
(d) BUSINESS EXPENSES. Duarte shall be entitled to reimbursement of
reasonable business related expenses from time to time consistent with
World's policies, including, without limitation, submitting in a timely
manner appropriate documentation of such expenses.
(e) FRINGE BENEFITS. Duarte shall be entitled to participate in all
employee benefit plans made available from time to time to all
executives of World in accordance with the terms of such plans. The
Company shall pay Duarte's expenses for moving his personal household
effects and one car, as well as reasonable expenses for housing in
Northern Virginia, including a rental car, for three months or until he
establishes a residence in the Northern Virginia area, whichever is
sooner.
(f) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as otherwise
provided herein, Duarte's employment shall be subject to the personnel
policies and benefits plans which apply generally to World's employees
as the same may be interpreted, adopted, revised or deleted from time
to time, during the term of this Agreement, by World in its sole
discretion. While this Agreement is in effect, Duarte shall be entitled
to one (1) month of paid vacation in each calendar year, and all paid
holidays observed by World.
(g) INDEMNIFICATION; D&O INSURANCE. Subject to Section 6(f) of this
Agreement, World shall provide (or cause to be provided) to Duarte
indemnification against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlements in connection with any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action
by or in the right of World) by reason of his being or having been an
officer, director or employee of World or any affiliated entity,
advance expenses (including attorneys' fees) incurred by Duarte in
defending any such civil, criminal, administrative or investigative
action, suit or proceeding and maintain directors' and officers'
liability insurance coverage (including coverage for securities-related
claims) upon substantially the same terms and conditions as set forth
in the Indemnification Agreement of even date herewith between Duarte
and World Airways, Inc. (the "Indemnity Agreement").
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Duarte's employment hereunder shall terminate upon his
death, in which event World shall have no further obligation to Duarte
or his estate with respect to compensation, other than the disposition
of life insurance and related benefits and accrued and unpaid base
salary and incentive compensation for periods prior to the date of
termination, if any, pursuant to the terms of the respective employee
benefits and incentive compensation plans then in effect.
(b) BY WORLD FOR DISABILITY. If Duarte incurs a disability and such
disability continues for a period of twelve (12) consecutive months,
then World may terminate this Agreement upon written notice to Duarte,
in which event World shall have no obligation to Duarte with respect to
compensation under Section 4(a) of this Agreement. The term
"disability" means a physical or mental illness that will prevent
Duarte from performing the essential functions of his job for at least
twelve (12) months or is likely to result in death. If Duarte becomes
entitled to Social Security benefits payable on account of disability,
he will be deemed conclusively to be disabled for purposes of this
Agreement.
(c) BY WORLD FOR CAUSE.
(i) Except under the circumstances set forth in 5(c)(ii)
below, the Chief Executive Officer of World may terminate this
Agreement, subject to Section 6(f) and those provisions that
survive this Agreement, for Cause. "Cause" shall be defined as
(A) sustained performance deficiencies which are communicated
to Duarte in written performance appraisals and/or other
written communications (including, but not limited to memos
and/or letters) by the Chief Executive Officer of World, (B)
gross misconduct, including significant acts or omissions
constituting dishonesty, intentional wrongdoing or
malfeasance, whether or not relating to the business of World,
(C) commission of a felony or any crime involving fraud or
dishonesty, or (D) a material breach of this Agreement.
(ii) In the event of a Change of Control, as defined below,
Duarte may only be terminated for Cause pursuant to a
resolution duly adopted by the affirmative vote of a majority
of the entire membership of the Board at a meeting of the
Board finding that, in the good faith opinion of the Board,
Duarte was guilty of conduct set forth in 5(c)(i)(A), (B), (C)
or (D) provided, however, that Duarte may not be terminated
for Cause hereunder unless: (1) Duarte receives prior written
notice of World's intention to terminate this Agreement for
Cause and the specific reasons therefor; and (2) Duarte has an
opportunity to be heard by World's Board of Directors and be
given, if the acts are correctable, a reasonable opportunity
to correct the act or acts (or non-action) giving rise to such
written notice. If the Board by resolution duly adopted by the
affirmative vote of a majority of the entire membership of the
Board finds that Duarte fails to make such correction after
reasonable opportunity to do so, this Agreement may be
terminated for Cause.
(d) BY WORLD FOR OTHER THAN CAUSE. In the event the Board of Directors
terminates this Agreement for reasons other than Cause or Disability as
defined in sub-paragraph (c) above, World will pay to Duarte within ten
(10) days of notice of termination (or, in the case of incentive bonus
compensation, within ten (10) days of determination of amounts payable
under the applicable bonus plan) the greater of eighteen month's base
salary, or the undiscounted remainder of his base salary, in each case
including deferred salary and/or bonus compensation, payable under this
Agreement. In addition, all granted but unvested stock options under
the Option Agreement shall become immediately exercisable. In the event
that any payment to Duarte under this paragraph is subject to any
federal or state excise tax, World shall pay to Duarte an additional
amount equal to the excise tax imposed including additional federal and
state income and excise taxes as a result of the payments under this
paragraph, and such payment will be made when the excise tax and income
taxes are due; provided, however, that Duarte agrees to assist World
Airways by using his best efforts to structure matters so that any
payment to Duarte under this paragraph is not subject to any federal or
state excise tax. Whether an excise tax is payable, and the amount of
the excise tax and additional income taxes payable, shall be determined
by World's accountants and World shall hold Duarte harmless for any and
all taxes, penalties, and interest that may become due as a result of
the failure to properly determine that an excise tax is payable or the
correct amount of the excise tax and additional income taxes, together
with all legal and accounting fees reasonably incurred by Duarte in
connection with any dispute with any taxing authority with respect to
such determinations and/or payments. In the event of a disagreement
between World and Duarte as to whether the termination was for Cause,
that issue shall be submitted by Duarte within twenty (20) days of the
notice of termination to binding arbitration, or any objection to
World's determination that termination is for Cause shall be waived.
(e) BY DUARTE FOR GOOD REASON. Duarte may terminate his employment
hereunder (for purposes of this Agreement "Good Reason") after giving
at least 30 days notice in the event that, without Duarte' consent: (i)
World relocates its general and administrative offices or Duarte's
place of employment to an area other than the Washington, D.C. Standard
Metropolitan Statistical Area, (ii) he is assigned any duties
substantially inconsistent with his responsibilities as described by
Section 3 hereof or a substantial adverse alteration is made to the
nature or status of such responsibilities, (iii) World reduces his
annual base salary as in effect on the date hereof or as the same may
be increased from time to time, except as provided in Section 4(a)
herein; (iv) World fails, without Duarte's consent, to pay Duarte any
portion of his current compensation, or to pay him any portion of an
installment of deferred compensation under any deferred compensation
program of World, within seven (7) days of the date such compensation
is due; (v) World fails to continue in effect any compensation plan in
which Duarte participates which is material to Duarte's total
compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or to continue Duarte's participation therein (or in such
substitute or alternative Plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of Duarte's participation relative to other participants; (vi)
World fails to continue to provide Duarte with benefits substantially
similar to those enjoyed by Duarte under any of World's pension, life
insurance, medical, health and accident, or disability plans in which
Duarte was participating, World takes any action which would directly
or indirectly materially reduce any of such benefits or deprive Duarte
of any material fringe benefit enjoyed by Duarte, or World fails to
provide Duarte with the number of paid vacation days to which Duarte is
entitled hereunder; (vii) World terminates, or proposes to terminate,
Duarte's employment hereunder contrary to the requirements of Section
5(c) hereof (for purposes of this Agreement, no such termination or
purported termination shall be effective) and Duarte has submitted the
matter to arbitration, as set forth in Section 5(d); or (viii) the
Board approves the liquidation or dissolution of World prior to the end
of this Agreement. In the event that Duarte decides to terminate this
Agreement and his employment with World or any successor in interest in
accordance with the provisions of this Section 5(e), World shall have
the same obligations as set forth in Section 5(d) hereof. Any other
payments due or actions required under this paragraph shall be made as
lump sums or taken within 10 days of termination of the Agreement.
(f) BY DUARTE FOR OTHER THAN GOOD REASON. Notwithstanding the above,
Duarte may upon giving reasonable notice, not to be less than 30 days,
terminate this Agreement without further obligation on the part of
Durate or World.
(g) CHANGES OF CONTROL. For purposes of this Agreement, a "Change of
Control" includes the occurrence of any one or more of the following
events:
(i) any Person is or becomes the Beneficial Owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), directly or indirectly, of
securities of World representing more than 50% of the combined
voting power of World's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board of World and any new director (other than
a director designated by a Person who has entered into an
agreement with World to effect a transaction described in
clause (i), (iii) or (iv) or this Section 5 (f)) whose
election by the Board of World or nomination for election by
the stockholders of World was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) the shareholders of World approve a merger or
consolidation of World with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of World outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or
being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of World or any of its affiliates, at least 50% of the
combined voting power of the voting securities of World or
such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of World (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of World's then outstanding securities;
or
(iv) the shareholders of World approve a plan of complete
liquidation of World or an agreement for the sale or
disposition by World of all or substantially all of World's
assets.
(h) "PERSON" DEFINED. For purposes of this Section, "Person" shall have
the meaning given in Section (3)(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) World or WorldCorp, Inc. or any of their subsidiaries
or affiliates; (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of World or WorldCorp, Inc. or any of
their subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation
owned, directly or indirectly, by the stockholders of World or
WorldCorp, Inc. in substantially the same proportions as their
ownership of stock of World or WorldCorp, Inc.
(i) NOTICE OF TERMINATION. Termination of this Agreement by World or
termination of this Agreement by Duarte shall be communicated by
written notice to the other party hereto, specifically indicating the
termination provision relied upon.
(j) COMPANY PROPERTY. At the termination of Duarte' employment, whether
voluntary or involuntary, Duarte shall return all company property,
including without limitation all electronic and paper files and
documents and all copies thereof.
6. CONFIDENTIALITY/RESTRICTIVE COVENANT.
(a) Duarte recognizes and acknowledges that he will acquire during his
employment with World information that is confidential to World and
that represents valuable, special and unique assets of World
("Confidential Information"). Such Confidential Information (whether or
not reduced to tangible form) includes, but is not limited to: trade
secrets; financing documents and information; financial data; new
product information; copyrights; information relating to schedules and
locations; cost and pricing information; performance features; business
techniques; business methods; business and marketing plans or
strategies; business dealings and arrangements; business objectives;
customer information; sales information; acquisition, merger or
business development plans or strategies; research and development
projects; legal documents and information; personnel information; and
any and all other information concerning World's business and business
practices that is not generally known or made available to the public
or to World's competitors which, if misused or disclosed, could
adversely affect the business of World. Duarte agrees that he will not,
during employment with World and for a period of two (2) years
following termination of employment for any reason, whether voluntary
or involuntary, with or without Cause, directly or indirectly:
(i) disclose any Confidential Information to any person,
company or other entity (other than authorized persons
employed by or affiliated with World who, in the interest of
World, have a business need to know such information), or
(ii) use any Confidential Information in any way, except as
required by his duties to World or by law,unless he obtains
World's prior written approval of such disclosure or use.
World's rights under this Section shall be cumulative to, and
shall not limit, World's rights under the Virginia Uniform
Trade Secrets Act or any other state or federal trade secret
or unfair competition statute or law. The parties hereto
stipulate that as between them, the foregoing matters are
important, material, and confidential and gravely affect the
successful conduct of the business of World, and World's good
will, and that any breach of the terms of this paragraph shall
be a material breach of this Agreement.
(b) While employed by World and for a period of two (2) years following
termination of employment for any reason, whether voluntary or
involuntary, with or without Cause, Duarte agrees that he will not,
directly or indirectly, either as principal, agent, employee, employer,
owner, stockholder (owning more than 5% of a corporation's shares),
partner, contractor, consultant or in any other individual or
representative capacity:
(i) Request, induce or attempt to induce any customer of
World: (A) to terminate or curtail any business relationship
with World or (B) to establish or attempt to establish a
similar business relationship with a person or entity other
than World;
(ii) Solicit, cause, encourage or in any way assist any person
or entity to solicit, any aviation business from any person or
entity who at such time is, or within the preceding twelve
(12) months, had been a customer of World, unless such
customer of World was also already a customer of such other
person or entity on the date of Duarte' termination;
(iii) Induce or attempt to induce any of World's officers,
directors, or employees to terminate their employment or
relationship with World, or induce or attempt to induce any
such persons to provide aviation-related services or services
similar to those they provide for World for any other person,
firm or organization.
(c) Duarte agrees that the restrictions set forth in this Agreement are
reasonable, proper, and necessitated by legitimate business interests
of World and do not constitute an unlawful or unreasonable restraint
upon Duarte's ability to earn a livelihood. The parties agree that in
the event any of the restrictions in this Agreement are found to be
over broad or unreasonable by a tribunal or court of competent
jurisdiction, the parties agree that this Agreement should be enforced
to the maximum extent allowed by applicable law, and the parties
authorize and request such court or tribunal to determine the maximum
time, geographic area, activity and other applicable limitations
allowable by law and to reform the applicable provisions to such
maximum limitations.
(d) Duarte acknowledges that it may be impossible to assess the
monetary damages incurred by his violation of this Agreement, or any of
its terms, and that any threatened or actual violation or breach of
this Agreement, or any of its terms, will constitute immediate and
irreparable injury to World. Therefore, Duarte expressly agrees that,
in addition to any and all monetary damages and other remedies and
relief available to World as a result of Duarte's violation or breach
of this Agreement, World shall be entitled to an injunction restraining
Duarte from violating or breaching this Agreement, or any of its terms
(and no bond or other security will be required in connection
therewith); World will be entitled to specific performance of this
Agreement; and World will be entitled to recover its reasonable
attorneys' fees and costs incurred to enforce, or prosecute or defend
any action relating to, this Agreement. In the event World enforces
this Agreement through court order or other decree, Duarte agrees that
the restrictions contained in this Agreement shall remain in effect for
a period of twenty four (24) consecutive months from the effective date
of such order or decree enforcing the Agreement.
(e) Section 9 of this Agreement, relating to arbitration, shall not
apply to this Section 6. The parties agree that any dispute between
them relating to or involving this Section 6, including without
limitation, any question concerning the construction, validity,
application, interpretation or alleged breach or threatened breach of
this Section 6, shall be litigated in a court in the Commonwealth of
Virginia.
(f) Section 4(h) of this Agreement and any other indemnity agreements
between Duarte and World shall not apply to actions, suits or
proceedings to enforce World's rights under, or that otherwise relate
to, this Agreement, including without limitation, this Section 6.
(g) References in this Section 6 to "World" include World Airways, Inc.
and any and all of its current or future parents, subsidiaries,
affiliated companies, and divisions.
7. BENEFICIARY. The Beneficiary of any payment due and payable at the time of
Duarte's death, or otherwise due upon his death, shall be his wife, or such
other person or persons as Duarte shall designate in writing to World. If no
such beneficiary shall survive Duarte, any such payments shall be made to his
estate.
8. INTELLECTUAL PROPERTY.
(a) Any improvements, new techniques, processes, inventions, works,
discoveries, products or copyrightable or patentable materials made or
conceived by Duarte, either solely or jointly with other person(s), (1)
during Duarte's period of employment by World, during working hours;
(2) during the period after termination of his employment during which
he is retained by World as a consultant; or (3) with use of World's
intellectual property or Confidential Information, shall be the sole
and exclusive property of World without royalty or other consideration
to Duarte.
(b) Duarte agrees to inform World promptly and in full of such
intellectual property by a full written report setting forth in detail
the procedures used and the results achieved.
(c) Duarte shall at World's request and expense execute any and all
applications, assignments, or other instruments which World shall deem
necessary to apply for, register, and/or obtain copyrights or Letters
Patent of the United States or of any foreign country, or to otherwise
protect World's interests in such intellectual property.
(d) Duarte shall assign and does hereby assign to World all interests
and rights, including but not limited to copyrights, in any such
intellectual property.
9. ARBITRATION. Except as described in Section 6, above, any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration, under the commercial arbitration rules of the
American Arbitration Association. The prevailing party in any such arbitration,
or any court action to enforce or vacate an arbitration award, shall be entitled
to its costs and reasonable attorneys fees from the other party.
10. NO WAIVER. The failure of either party at any time to enforce any provisions
of this Agreement or to exercise any remedy, option, right, power or privilege
provided for herein, or to require the performance by the other party of any of
the provisions hereof, shall in no way be deemed a waiver of such provision at
the same or at any prior or subsequent time.
11. GOVERNING LAW. All questions concerning the construction, validity,
application and interpretation of this Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia without giving
effect to any choice of law or conflict of law provision or rule (whether of
Virginia or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than Virginia. Duarte agrees to submit to personal
jurisdiction in the State of Virginia.
12. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
13. SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon
World, its successors and assigns, including any corporation or other business
entity which may acquire all or substantially all of World's assets or business,
or within which World may be consolidated or merged, or any surviving
corporation in a merger involving World.
14. WAIVER OF MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement shall be valid unless in writing and duly executed by both parties.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
WORLD AIRWAYS, INC.
By: ________________________________
Russell L. Ray
President and CEO
________________________________
Gilberto M.Duarte, Jr.
AMENDMENT NUMBER 1
TO
EMPLOYMENT AGREEMENT
This Amendment Number 1 to the Employment Agreement dated October 15, 1998,
between World Airways, Inc., a Delaware corporation and Serge Feller
(hereinafter referred to as the "Agreement") is entered into this 22nd day of
January 1999.
WHEREAS, the parties desire to continue Mr. Feller's employment, and to renew
the Agreement on different terms to modify Mr. Feller's protections in the event
of a change of control.
NOW, THEREFORE, in consideration of the foregoing and other mutual
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree to amend the Agreement in its entirety as follows:
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of January 22, 1999 (the "Agreement"), is by
and between World Airways, Inc., a Delaware corporation, its successors and
assigns (hereinafter "World") and Serge F. Feller (Feller).
WHEREAS, Feller has agreed to serve as World's Executive Vice President for
Sales and Marketing, as of the date hereof;
NOW, THEREFORE, World and Feller, in consideration of the mutual covenants and
promises contained herein, do hereby agree as follows:
1. ACCEPTANCE OF EMPLOYMENT. Subject to the terms and conditions set forth
below, World agrees to employ Feller and Feller accepts such employment.
2. TERM. The period of employment shall be from the date first written above
through October 15, 1999, unless further extended or sooner terminated as
hereinafter set forth. Not less than 180 days prior to the expiry of this
Agreement, Feller shall initiate discussions with the President and CEO
regarding the renewal of the Agreement. If World does not wish to renew this
Agreement at its expiration, or wishes to renew on different terms, World shall
give written notice to Feller at least 180 days prior to the Agreement's
expiration. If Feller wishes to renew this Agreement on different terms, Feller
shall give written notice to World at least 180 days prior to the its
expiration. In the absence of notice, this Agreement shall be renewed on the
same terms and conditions for successive terms of one year from the date of
expiration.
3. POSITION AND DUTIES. Feller shall continue to serve as Executive Vice
President of Sales and Marketing with the duties performed as of the date
hereof, as those duties may be changed from time to time. The President and CEO
will have reasonable latitude to make changes in Feller's responsibilities,
except that Feller's responsibilities may not be modified in a way that would be
nconsistent with the status of a company executive. Following a Change of
Control (as hereinafter defined), Feller's responsibilities may not be changed
without mutual agreement. Feller agrees to render his services to the best of
his abilities and will comply with all policies, rules and regulations of the
company and will advance and promote to the best of his ability the business and
welfare of the company. Feller shall devote all of his working time, attention,
knowledge and skills solely to the business and interest of World. Feller may
not accept any other engagement with or without compensation which would affect
his ability to devote all of his working time and attention to the business and
affairs of World without the prior written approval of the President and CEO.
Feller agrees to accept assignments on behalf of World or affiliated companies
commensurate with his responsibilities hereunder, except that the terms and
conditions of assignments exceeding 60 consecutive days outside the Washington,
D.C. metropolitan area will require mutual agreement.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Feller shall receive a minimum salary of $200,000 per
annum payable in accordance with the payroll procedures for World's
salaried employees in effect during the term of this Agreement.
(b) ELIGIBILITY FOR BONUSES. Feller shall be eligible to receive an
annual bonus pursuant to World's 1998 management incentive compensation
plan and successor plans, if any, as the Board of Directors may adopt
from time to time. A copy of the 1998 Plan is attached as Exhibit A
hereto.
(c) PERFORMANCE STOCK OPTIONS. Feller has been granted options to
purchase World's Common Stock, par value $.001 per share ("World
Airways Common Stock") pursuant to the 1995 World Airways Stock Option
Plan (the "Plan") as set forth in the Stock Option Agreement between
World and Feller dated this same date (the "Option Agreement"), a copy
of which is attached as Exhibit B hereto.
(d) BUSINESS EXPENSES. Feller shall be entitled to reimbursement of
reasonable business related expenses from time to time consistent with
World's policies, including, without limitation, submitting in a timely
manner appropriate documentation of such expenses.
(e) FRINGE BENEFITS. Feller shall be entitled to participate in all
employee benefit plans made available from time to time to all
executives of World in accordance with the terms of such plans.
(f) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as otherwise
provided herein, Feller's employment shall be subject to the personnel
policies and benefits plans which apply generally to World's employees
as the same may be interpreted, adopted, revised or deleted from time
to time, during the term of this Agreement, by World in its sole
discretion. While this Agreement is in effect, Feller shall accrue
vacation at the rate of one month per year and such vacation shall be
taken in accordance with the Company's procedures.
(g) INDEMNIFICATION; D&O INSURANCE. Subject to Section 6(f) of this
Agreement, World shall provide (or cause to be provided) to Feller
indemnification against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlements in connection with any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action
by or in the right of World) by reason of his being or having been an
officer, director or employee of World or any affiliated entity,
advance expenses (including attorneys' fees) incurred by Feller in
defending any such civil, criminal, administrative or investigative
action, suit or proceeding and maintain directors' and officers'
liability insurance coverage (including coverage for securities-related
claims) upon substantially the same terms and conditions as set forth
in the Indemnification Agreement of even date herewith between Feller
and World Airways, Inc. (the "Indemnity Agreement").
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Feller's employment hereunder shall terminate upon his
death, in which event World shall have no further obligation to Feller
or his estate with respect to compensation, other than the disposition
of life insurance and related benefits and accrued and unpaid base
salary and incentive compensation for periods prior to the date of
termination, if any, pursuant to the terms of the respective employee
benefits and incentive compensation plans then in effect.
(b) BY WORLD FOR DISABILITY. If Feller incurs a disability and such
disability continues for a period of twelve (12) consecutive months,
then World may terminate this Agreement upon written notice to Feller,
in which event World shall have no obligation to Feller with respect to
compensation under Section 4(a) of this Agreement. The term
"disability" means a physical or mental illness that will prevent
Feller from performing the essential functions of his job for at least
twelve (12) months or is likely to result in death. If Feller becomes
entitled to Social Security benefits payable on account of disability,
he will be deemed conclusively to be disabled for purposes of this
Agreement.
(c) BY WORLD FOR CAUSE.
(i) Except under the circumstances set forth in 5(c)(ii)
below, the President and CEO of World may terminate this
Agreement, subject to Section 6(f) and those provisions that
survive this Agreement, for Cause. "Cause" shall be defined as
(A) sustained performance deficiencies which are communicated
to Feller in written performance appraisals and/or other
written communications (including, but not limited to memos
and/or letters) by the President and CEO of World, (B) gross
misconduct, including significant acts or omissions
constituting dishonesty, intentional wrongdoing or
malfeasance, whether or not relating to the business of World,
(C) commission of a felony or any crime involving fraud or
dishonesty, or (D) a material breach of this Agreement.
(ii) In the event of a Change of Control, as defined below,
Feller may only be terminated for Cause pursuant to a
resolution duly adopted by the affirmative vote of a majority
of the entire membership of the Board at a meeting of the
Board finding that, in the good faith opinion of the Board,
Feller was guilty of conduct set forth in 5(c)(i)(A), (B), (C)
or (D) provided, however, that Feller may not be terminated
for Cause hereunder unless: (1) Feller receives prior written
notice of World's intention to terminate this Agreement for
Cause and the specific reasons therefor; and (2) Feller has an
opportunity to be heard by World's Board of Directors and be
given, if the acts are correctable, a reasonable opportunity
to correct the act or acts (or non-action) giving rise to such
written notice. If the Board by resolution duly adopted by the
affirmative vote of a majority of the entire membership of the
Board finds that Feller fails to make such correction after
reasonable opportunity to do so, this Agreement may be
terminated for Cause.
(d) BY WORLD FOR OTHER THAN CAUSE. In the event the Board of Directors
terminates this Agreement for reasons other than Cause or Disability as
defined in sub-paragraph (c) above, World will pay to Feller within ten
(10) days of notice of termination (or, in the case of incentive bonus
compensation, within ten (10) days of determination of amounts payable
under the applicable bonus plan) the greater of eighteen month's base
salary, or the undiscounted remainder of his base salary, in each case
including deferred salary and/or bonus compensation, payable under this
Agreement. In addition, all granted but unvested stock options under
the Option Agreement shall become immediately exercisable. In the event
that any payment to Feller under this paragraph is subject to any
federal or state excise tax, World shall pay to Feller an additional
amount equal to the excise tax imposed including additional federal and
state income and excise taxes as a result of the payments under this
paragraph, and such payment will be made when the excise tax and income
taxes are due; provided, however, that Feller agrees to assist World
Airways by using his best efforts to structure matters so that any
payment to Feller under this paragraph is not subject to any federal or
state excise tax. Whether an excise tax is payable, and the amount of
the excise tax and additional income taxes payable, shall be determined
by World's accountants and World shall hold Feller harmless for any and
all taxes, penalties, and interest that may become due as a result of
the failure to properly determine that an excise tax is payable or the
correct amount of the excise tax and additional income taxes, together
with all legal and accounting fees reasonably incurred by Feller in
connection with any dispute with any taxing authority with respect to
such determinations and/or payments. In the event of a disagreement
between World and Feller as to whether the termination was for Cause,
that issue shall be submitted by Feller within twenty (20) days of the
notice of termination to binding arbitration, or any objection to
World's determination that termination is for Cause shall be waived.
(e) BY FELLER FOR GOOD REASON. Feller may terminate his employment
hereunder (for purposes of this Agreement "Good Reason") after giving
at least 30 days notice in the event that, without Feller's consent:
(i) World relocates its general and administrative offices or
Feller's place of employment to an area other than the Washington, D.C.
Standard Metropolitan Statistical Area, (ii) he is assigned any duties
substantially inconsistent with Section 3 hereof, (iii) World reduces
his annual base salary as in effect on the date hereof or as the same
may be increased from time to time; (iv) World fails, without Feller's
consent, to pay Feller any portion of his current compensation, or to
pay him any portion of an installment of deferred compensation under
any deferred compensation program of World, within seven (7) days of
the date such compensation is due; (v) World fails to continue in
effect any compensation plan in which Feller participates which is
material to Feller's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or to continue Feller's
participation therein (or in such substitute or alternative Plan) on a
basis not materially less favorable, both in terms of the amount of
benefits provided and the level of Feller's participation relative to
other participants; (vi) World fails to continue to provide Feller with
benefits substantially similar to those enjoyed by Feller under any of
World's pension, life insurance, medical, health and accident, or
disability plans in which Feller was participating, World takes any
action which would directly or indirectly materially reduce any of such
benefits or deprive Feller of any material fringe benefit enjoyed by
Feller, or World fails to provide Feller with the number of paid
vacation days to which Feller is entitled hereunder; (vii) World
terminates, or proposes to terminate, Feller's employment hereunder
contrary to the requirements of Section 5(c) hereof (for purposes of
this Agreement, no such termination or purported termination shall be
effective) and Feller has submitted the matter to arbitration, as set
forth in Section 5(d); or (viii) the Board approves the liquidation or
dissolution of World prior to the end of this Agreement. In the event
that Feller decides to terminate this Agreement and his employment with
World or any successor in interest in accordance with the provisions of
this Section 5(e), World shall have the same obligations as set forth
in Section 5(d) hereof. Any other payments due or actions required
under this paragraph shall be made as lump sums or taken within 10 days
of termination of the Agreement.
(f) BY FELLER FOR OTHER THAN GOOD REASON. Notwithstanding the above,
Feller may upon giving reasonable notice, not to be less than 30 days,
terminate this Agreement without further obligation on the part of
Feller or World.
(g) CHANGES OF CONTROL. For purposes of this Agreement, a "Change of
Control" includes the occurrence of any one or more of the following
events:
(i) any Person is or becomes the Beneficial Owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), directly or indirectly, of
securities of World representing more than 50% of the combined
voting power of World's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board of World and any new director (other than
a director designated by a Person who has entered into an
agreement with World to effect a transaction described in
clause (i), (iii) or (iv) or this Section 5 (f)) whose
election by the Board of World or nomination for election by
the stockholders of World was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) the shareholders of World approve a merger or
consolidation of World with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of World outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or
being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of World or any of its affiliates, at least 50% of the
combined voting power of the voting securities of World or
such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of World (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of World's then outstanding securities;
or
(iv) the shareholders of World approve a plan of complete
liquidation of World or an agreement for the sale or
disposition by World of all or substantially all of World's
assets.
(h) "PERSON" DEFINED. For purposes of this Section, "Person" shall have
the meaning given in Section (3)(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) World or WorldCorp, Inc. or any of their subsidiaries
or affiliates; (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of World or WorldCorp, Inc. or any of
their subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation
owned, directly or indirectly, by the stockholders of World or
WorldCorp, Inc. in substantially the same proportions as their
ownership of stock of World or WorldCorp, Inc.
(i) NOTICE OF TERMINATION. Termination of this Agreement by World or
termination of this Agreement by Feller shall be communicated by
written notice to the other party hereto, specifically indicating the
termination provision relied upon.
(j) COMPANY PROPERTY. At the termination of Feller's employment,
whether voluntary or involuntary, Feller shall return all company
property, including without limitation all electronic and paper files
and documents and all copies thereof.
6. CONFIDENTIALITY/RESTRICTIVE COVENANT.
(a) Feller recognizes and acknowledges that he will acquire during his
employment with World information that is confidential to World and
that represents valuable, special and unique assets of World
("Confidential Information"). Such Confidential Information (whether or
not reduced to tangible form) includes, but is not limited to: trade
secrets; financing documents and information; financial data; new
product information; copyrights; information relating to schedules and
locations; cost and pricing information; performance features; business
techniques; business methods; business and marketing plans or
strategies; business dealings and arrangements; business objectives;
customer information; sales information; acquisition, merger or
business development plans or strategies; research and development
projects; legal documents and information; personnel information; and
any and all other information concerning World's business and business
practices that is not generally known or made available to the public
or to World's competitors which, if misused or disclosed, could
adversely affect the business of World. Feller agrees that he will not,
during employment with World and for a period of two (2) years
following termination of employment for any reason, whether voluntary
or involuntary, with or without Cause, directly or indirectly:
(i) disclose any Confidential Information to any person,
company or other entity (other than authorized persons
employed by or affiliated with World who, in the interest of
World, have a business need to know such information), or
(ii) use any Confidential Information in any way, except as
required by his duties to World or by law, unless he obtains
World's prior written approval of such disclosure or use.
World's rights under this Section shall be cumulative to, and
shall not limit, World's rights under the Virginia Uniform
Trade Secrets Act or any other state or federal trade secret
or unfair competition statute or law. The parties hereto
stipulate that as between them, the foregoing matters are
important, material, and confidential and gravely affect the
successful conduct of the business of World, and World's good
will, and that any breach of the terms of this paragraph shall
be a material breach of this Agreement.
(b) While employed by World and for a period of two (2) years following
termination of employment for any reason, whether voluntary or
involuntary, with or without Cause, Feller agrees that he will not,
directly or indirectly, either as principal, agent, employee, employer,
owner, stockholder (owning more than 5% of a corporation's shares),
partner, contractor, consultant or in any other individual or
representative capacity:
(i) Request, induce or attempt to induce any customer of
World: (A) to terminate or curtail any business relationship
with World or (B) to establish or attempt to establish a
similar business relationship with a person or entity other
than World;
(ii) Solicit, cause, encourage or in any way assist any person
or entity to solicit, any aviation business from any person or
entity who at such time is, or within the preceding twelve
(12) months, had been a customer of World, unless such
customer of World was also already a customer of such other
person or entity on the date of Feller's termination;
(iii) Induce or attempt to induce any of World's officers,
directors, or employees to terminate their employment or
relationship with World, or induce or attempt to induce any
such persons to provide aviation-related services or services
similar to those they provide for World for any other person,
firm or organization.
(c) Feller agrees that the restrictions set forth in this Agreement are
reasonable, proper, and necessitated by legitimate business interests
of World and do not constitute an unlawful or unreasonable restraint
upon Feller's ability to earn a livelihood. The parties agree that in
the event any of the restrictions in this Agreement are found to be
overbroad or unreasonable by a tribunal or court of competent
jurisdiction, the parties agree that this Agreement should be enforced
to the maximum extent allowed by applicable law, and the parties
authorize and request such court or tribunal to determine the maximum
time, geographic area, activity and other applicable limitations
allowable by law and to reform the applicable provisions to such
maximum limitations.
(d) Feller acknowledges that it may be impossible to assess the
monetary damages incurred by his violation of this Agreement, or any of
its terms, and that any threatened or actual violation or breach of
this Agreement, or any of its terms, will constitute immediate and
irreparable injury to World. Therefore, Feller expressly agrees that,
in addition to any and all monetary damages and other remedies and
relief available to World as a result of Feller's violation or breach
of this Agreement, World shall be entitled to an injunction restraining
Feller from violating or breaching this Agreement, or any of its terms
(and no bond or other security will be required in connection
therewith); World will be entitled to specific performance of this
Agreement; and World will be entitled to recover its reasonable
attorneys' fees and costs incurred to enforce, or prosecute or defend
any action relating to, this Agreement. In the event World enforces
this Agreement through court order or other decree, Feller agrees that
the restrictions contained in this Agreement shall remain in effect for
a period of twenty four (24) consecutive months from the effective date
of such order or decree enforcing the Agreement.
(e) Section 9 of this Agreement, relating to arbitration, shall not
apply to this Section 6. The parties agree that any dispute between
them relating to or involving this Section 6, including without
limitation, any question concerning the construction, validity,
application, interpretation or alleged breach or threatened breach of
this Section 6, shall be litigated in a court in the Commonwealth of
Virginia.
(f) Section 4(h) of this Agreement and any other indemnity agreements
between Feller and World shall not apply to actions, suits or
proceedings to enforce World's rights under, or that otherwise relate
to, this Agreement, including without limitation, this Section 6.
(g) References in this Section 6 to "World" include World Airways, Inc.
and any and all of its current or future parents, subsidiaries,
affiliated companies, and divisions.
7. BENEFICIARY. The Beneficiary of any payment due and payable at the time of
Feller's death, or otherwise due upon his death, shall be such person or persons
as Feller shall designate in writing to World. If no such beneficiary shall
survive Feller, any such payments shall be made to his estate.
8. INTELLECTUAL PROPERTY.
(a) Any improvements, new techniques, processes, inventions, works,
discoveries, products or copyrightable or patentable materials made or
conceived by Feller, either solely or jointly with other person(s), (1)
during Feller's period of employment by World, during working hours;
(2) during the period after termination of his employment during which
he is retained by World as a consultant; or (3) with use of World's
intellectual property or Confidential Information, shall be the sole
and exclusive property of World without royalty or other consideration
to Feller.
(b) Feller agrees to inform World promptly and in full of such
intellectual property by a full written report setting forth in detail
the procedures used and the results achieved.
(c) Feller shall at World's request and expense execute any and all
applications, assignments, or other instruments which World shall deem
necessary to apply for, register, and/or obtain copyrights or Letters
Patent of the United States or of any foreign country, or to otherwise
protect World's interests in such intellectual property.
(d) Feller shall assign and does hereby assign to World all interests
and rights, including but not limited to copyrights, in any such
intellectual property.
9. ARBITRATION. Except as described in Section 6, above, any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration, under the commercial arbitration rules of the
American Arbitration Association. The prevailing party in any such arbitration,
or any court action to enforce or vacate an arbitration award, shall be entitled
to its costs and reasonable attorneys fees from the other party.
10. NO WAIVER. The failure of either party at any time to enforce any provisions
of this Agreement or to exercise any remedy, option, right, power or privilege
provided for herein, or to require the performance by the other party of any of
the provisions hereof, shall in no way be deemed a waiver of such provision at
the same or at any prior or subsequent time.
11. GOVERNING LAW. All questions concerning the construction, validity,
application and interpretation of this Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia without giving
effect to any choice of law or conflict of law provision or rule (whether of
Virginia or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than Virginia. Feller agrees to submit to personal
jurisdiction in the State of Virginia.
12. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
13. SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon
World, its successors and assigns, including any corporation or other business
entity which may acquire all or substantially all of World's assets or business,
or within which World may be consolidated or merged, or any surviving
corporation in a merger involving World.
14. WAIVER OF MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreem ent shall be valid unless in writing and duly executed by both parties.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
WORLD AIRWAYS, INC.
By: ____________________________
Russell L. Ray, Jr.
President and CEO
____________________________
Serge F. Feller
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (hereinafter, the "Agreement")
replaces in the entirety the Employment Agreement dated October 1, 1996 between
World Airways, Inc., a Delaware corporation and Vance Fort, as subsequently
modified on July 16, 1998, by Amendment Number 1 to that Employment Agreement
and is entered into this 22nd day of January 1999.
THIS EMPLOYMENT AGREEMENT dated as of October 1, 1996 ("Agreement"), is by and
between World Airways, Inc., a Delaware corporation, its successors and assigns
(hereinafter "World") and Vance Fort ("Fort").
WHEREAS, Fort has served as World's Executive Vice President since April 18,
1996;
WHEREAS, World desires to continue to employ Fort and Fort desires to continue
to serve World as Executive Vice President;
NOW, THEREFORE, World and Fort, in consideration of the mutual covenants and
promises contained herein, do hereby agree as follows:
1. ACCEPTANCE OF EMPLOYMENT. Subject to the terms and conditions set forth
below, World agrees to employ Fort and Fort accepts such employment.
2. TERM. The period of employment shall be from the date first written above
through December 31, 1999, unless further extended or sooner terminated as
hereinafter set forth. If either World or Fort wishes to renew this Agreement on
different terms, or World does not wish to renew this Agreement when it expires
on December 31, 1999, World shall give written notice at least one hundred
eighty (180) days prior to the expiration date. In the absence of notice, this
Agreement shall be renewed on the same terms and conditions for a term of one
year from the date of expiration.
3. POSITION AND DUTIES. Fort shall continue to serve as Executive Vice President
with the duties performed as of the date hereof, as those duties may be changed
from time to time by mutual agreement, except that Fort's responsibilities may
not be modified in a way that would be inconsistent with the status of a senior
executive. Following a Change of Control (as hereinafter defined), Fort's
responsibilities may not be changed without mutual agreement. Fort agrees to
render his services to the best of his abilities and will comply with all
policies, rules and regulations of the company and will advance and promote to
the best of his ability the business and welfare of the company. Fort shall
devote all of his working time, attention, knowledge and skills solely to the
business and interest of World. Fort may not accept any other engagement with or
without compensation which would affect his ability to devote all of his working
time and attention to the business and affairs of World without the prior
written approval of the President. Fort agrees to accept assignments on behalf
of World or affiliated companies commensurate with his responsibilities
hereunder, except that the terms and conditions of assignments exceeding 60
consecutive days outside the Washington, D.C. metropolitan area will require
mutual agreement.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Fort shall receive a minimum salary of $200,000 per
annum payable in monthly installments in accordance with the payroll
procedures for World's salaried employees in effect during the term of
this Agreement. Fort agrees to participate equally, on a percentage
basis, in any across the board salary reductions approved by senior
management.
(b) ELIGIBILITY FOR BONUSES. Fort shall be eligible to receive an
annual bonus pursuant to World's 1996 management incentive compensation
plan and successor plans, if any, as the Board of Directors may adopt
from time to time. A copy of the 1996 Plan is attached as Exhibit A
hereto.
(c) PERFORMANCE STOCK OPTIONS. Fort has been granted options to
purchase World's Common Stock, par value $.001 per share ("World
Airways Common Stock") pursuant to the 1995 World Airways Stock Option
Plan (the "Plan") as set forth in the Stock Option Agreement between
World and Fort dated May 31, 1995 (the "Option Agreement"), a copy of
which is attached.
(d) BUSINESS EXPENSES. Fort shall be entitled to reimbursement of
reasonable business related expenses from time to time consistent with
World's policies, including, without limitation, submitting in a timely
manner appropriate documentation of such expenses.
(e) FRINGE BENEFITS. Fort shall be entitled to participate in all
employee benefit plans made available from time to time to all senior
executives of World in accordance with the terms of such plans. In the
event this Agreement is terminated by either party for any reason other
than death or for Cause, Fort may participate in World's health
programs for one year for each year of service with World (prorated in
the case of a partial year) on the same terms available to the most
senior executives of World or its affiliates, or until Fort obtains
comparable coverage, whichever is earlier.
(f) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as otherwise
provided herein, Fort's employment shall be subject to the personnel
policies and benefits plans which apply generally to World's employees
as the same may be interpreted, adopted, revised or deleted from time
to time, during the term of this Agreement, by World in its sole
discretion. While this Agreement is in effect, Fort shall be entitled
to one (1) month of paid vacation in each calendar year, and all paid
holidays observed by World.
(g) INDEMNIFICATION; D&O INSURANCE. World shall provide (or cause to be
provided) to Fort indemnification against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlements in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of World) by reason of his
being or having been an officer, director or employee of World or any
affiliated entity, advance expenses (including attorneys' fees)
incurred by Fort in defending any such civil, criminal, administrative
or investigative action, suit or proceeding and maintain directors' and
officers' liability insurance coverage (including coverage for
securities-related claims) upon substantially the same terms and
conditions as set forth in the Indemnification Agreement dated October
1, 1996 between Fort and World Airways, Inc.
(the "Indemnity Agreement").
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Fort's employment hereunder shall terminate upon his death,
in which event World shall have no further obligation to Fort or his
estate with respect to compensation, other than the disposition of life
insurance and related benefits and accrued and unpaid base salary and
incentive compensation for periods prior to the date of termination, if
any, pursuant to the terms of the respective employee benefits and
incentive compensation plans then in effect.
(b) BY WORLD FOR DISABILITY. If Fort incurs a disability and such
disability continues for a period of twelve (12) consecutive months,
then World may terminate this Agreement upon written notice to Fort, in
which event World shall have no obligation to Fort with respect to
compensation under Section 4(a) of this Agreement. The term
"disability" means a physical or mental illness that will prevent Fort
from performing the essential functions of his job for at least twelve
(12) months or is likely to result in death. If Fort becomes entitled
to Social Security benefits payable on account of disability, he will
be deemed conclusively to be disabled for purposes of this Agreement.
(c) BY WORLD FOR CAUSE.
(i) Except under the circumstances set forth in 5(c)(ii)
below, the President and Chief Executive Officer of World may
terminate this Agreement for Cause. "Cause" shall be defined
as (A) sustained performance deficiencies which are
communicated to Fort in written performance appraisals and/or
other written communications (including, but not limited to
memos and/or letters) by the President and Chief Executive
Officer of World, (B) gross misconduct, including significant
acts or omissions constituting dishonesty, intentional
wrongdoing or malfeasance, relating to the business of World,
or (C) commission of a felony involving fraud or dishonesty,
or (D) a material breach of this Agreement.
(ii) In the event of a Change of Control, as defined below,
Fort may only be terminated for Cause pursuant to a resolution
duly adopted by the affirmative vote of a majority of the
entire membership of the Board at a meeting of the Board
finding that, in the good faith opinion of the Board, Fort was
guilty of conduct set forth in 5(c)(i)(A), (B), (C) or (D)
provided, however, that Fort may not be terminated for Cause
unless: (1) Fort receives prior written notice of World's
intention to terminate this Agreement for Cause and the
specific reasons therefor; and (2) Fort has an opportunity to
be heard by World's Board of Directors and be given, if the
acts are correctable, a reasonable opportunity to correct the
act or acts (or non-action) giving rise to such written
notice. If the Board by resolution duly adopted by the
affirmative vote of a majority of the entire membership of the
Board finds that Fort fails to make such correction after
reasonable opportunity to do so, this Agreement may be
terminated for Cause. In the event of a disagreement between
World and Fort as to whether the termination was for Cause,
that issue shall be submitted within twenty (20) days of the
notice of termination to binding arbitration.
(d) BY WORLD FOR OTHER THAN CAUSE. In the event the Board of Directors
terminates this Agreement for reasons other than Cause as defined in
sub-paragraph (c) above, World will pay to Fort within ten (10) days of
notice of termination (or, in the case of incentive bonus compensation,
within ten (10) days of the determination of amounts payable under the
applicable bonus plan generally) the greater of eighteen month's salary
or the undiscounted remainder of his base salary, including deferred
salary and/or bonus compensation, payable under this Agreement. In
addition, all granted but unvested stock options under the Option
Agreement shall become immediately exercisable. In the event that any
payment to Fort under this paragraph is subject to any federal or state
excise tax, World shall pay to Fort an additional amount equal to the
excise tax imposed including additional federal and state income and
excise taxes as a result of the payments under this paragraph, and such
payment will be made when the excise tax and income taxes are due;
provided, however, that Fort agrees to assist World Airways by using
his best efforts to structure matters so that any payment to Fort under
this paragraph is not subject to any federal or state excise tax.
Whether an excise tax is payable, and the amount of the excise tax and
additional income taxes payable, shall be determined by World's
accountants and World shall hold Fort harmless for any and all taxes,
penalties, and interest that may become due as a result of the failure
to properly determine that an excise tax is payable or the correct
amount of the excise tax and additional income taxes, together with all
legal and accounting fees reasonably incurred by Fort in connection
with any dispute with any taxing authority with respect to such
determinations and/or payments.
(e) BY FORT FOR GOOD REASON. Fort may terminate his employment
hereunder (for purposes of this Agreement "Good Reason") after giving
at least 30 days notice in the event that: (i) World relocates its
general and administrative offices or Fort's place of employment to an
area other than the Washington, D.C. Standard Metropolitan Statistical
Area, (ii) he is assigned any duties substantially inconsistent with
his responsibilities as described by Section 3 hereof or a substantial
adverse alteration is made to the nature or status of such
responsibilities, (iii) World reduces his annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except as provided in Section 4(a) herein; (iv) World fails,
without Fort's consent, to pay Fort any portion of his current
compensation, or to pay him any portion of an installment of deferred
compensation under any deferred compensation program of World, within
seven (7) days of the date such compensation is due; (v) World fails to
continue in effect any compensation plan in which Fort participates
which is material to Fort's total compensation, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan) has
been made with respect to such plan, or the failure by World to
continue Fort's participation therein (or in such substitute or
alternative Plan) on a basis not materially less favorable, both in
terms of the amount of benefits provided and the level of Fort's
participation relative to other participants; (vi) World fails to
continue to provide Fort with benefits substantially similar to those
enjoyed by Fort under any of World's pension, life insurance, medical,
health and accident, or disability plans in which Fort was
participating, World takes any action which would directly or
indirectly materially reduce any of such benefits or deprive Fort of
any material fringe benefit enjoyed by Fort, or World fails to provide
Fort with the number of paid vacation days to which Fort is entitled
hereunder; (vii) World terminates, or proposes to terminate, Fort's
employment hereunder contrary to the requirements of Section 5(c)
hereof (for purposes of this Agreement, no such termination or
purported termination shall be effective); (viii) the Board approves
the liquidation or dissolution of World prior to the end of this
Agreement.
(f) BY FORT FOR OTHER THAN GOOD REASON. Notwithstanding the above, Fort
may upon giving reasonable notice, not to be less than 30 days,
terminate this Agreement without further obligation on the part of Fort
or World.
(g) CHANGES OF CONTROL. For purposes of this Agreement, a "Change of
Control" includes the occurrence of any one or more of the following
events:
(i) any Person is or becomes the Beneficial Owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), directly or indirectly, of
securities of World representing more than 50% of the combined
voting power of World's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board of World and any new director (other than
a director designated by a Person who has entered into an
agreement with World to effect a transaction described in
clause (i), (iii) or (iv) or this Section 5 (f)) whose
election by the Board of World or nomination for election by
the stockholders of World was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) the shareholders of World approve a merger or
consolidation of World with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of World outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or
being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of World or any of its affiliates, at least 50% of the
combined voting power of the voting securities of World or
such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of World (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of World's then outstanding securities;
or
(iv) the shareholders of World approve a plan of complete
liquidation of World or an agreement for the sale or
disposition by World of all or substantially all of World's
assets.
(h) "PERSON" DEFINED. For purposes of this Section, "Person" shall have
the meaning given in Section (3)(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) World or WorldCorp, Inc. or any of its subsidiaries or
affiliates; (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of World or WorldCorp, Inc. or any of their
subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation
owned, directly or indirectly, by the stockholders of World or
WorldCorp, Inc. in substantially the same proportions as their
ownership of stock of World or WorldCorp, Inc.
(i) EFFECT OF TERMINATION BY FORT. In the event that Fort decides to
terminate this Agreement and his employment with World or any successor
in interest in accordance with the provisions of Section 5(e), World
shall have the same obligations as set forth in Section 5(d) hereof.
Any other payments due or actions required under this paragraph shall
be made as lump sums or taken within 10 days of termination of the
Agreement.
(j) EXCISE TAX INDEMNITY. In the event that any payment to Fort under
Section 5(e) is subject to any federal or state excise tax, World shall
pay to Fort an additional amount equal to the excise tax imposed
including additional federal and state income and excise taxes as a
result of the payments under this paragraph, and such payment will be
made when the excise tax and income taxes are due; provided, however,
that Fort agrees to assist World Airways by using his best efforts to
structure matters so that any payment to Fort under this paragraph is
not subject to any federal or state excise tax. Whether an excise tax
is payable, and the amount of the excise tax and additional income
taxes payable, shall be determined by World's accountants and World
shall hold Fort harmless for any and all taxes, penalties, and interest
that may become due as a result of the failure to properly determine
that an excise tax is payable or the correct amount of the excise tax
and additional income taxes, together with all legal and accounting
fees reasonably incurred by Fort in connection with any dispute with
any taxing authority with respect to such determinations and/or
payments.
(k) NOTICE OF TERMINATION. Termination of this Agreement by World or
termination of this Agreement by Fort shall be communicated by written
notice to the other party hereto, specifically indicating the
termination provision relied upon.
(l) COMPANY PROPERTY. At the end of the term described in Section 2 or
in the event of termination under Section, Fort shall return all
company property, including electronic and paper files, with the
exception of the cellular phone(s).
6. CONFIDENTIALITY/RESTRICTIVE COVENANT.
(a) Fort recognizes and acknowledges that financing documents, trade
secrets, new products, copyrights, schedules, costs, performance
features, techniques, plans, methods, business and marketing plans,
dealings, arrangements, objectives, locations, customer information and
other information concerning World's business and business practices
not generally known in the aviation industry, constitute confidential
information and represent valuable, special and unique assets of World
("Confidential Information"). Fort agrees that he will not, during
employment with World or for a period of two (2) years following
termination of employment for any reason, whether voluntary or
involuntary, with or without Cause, disclose any of such Confidential
Information to any person or person not connected with World without
World's prior written approval. The parties hereto stipulate that as
between them, the foregoing matters are important, material, and
confidential and gravely affect the successful conduct of the business
of World, and World's good will, and that any breach of the terms of
this paragraph shall be a material breach of this Agreement.
(b) While employed by World and for a period of two (2) years following
termination of employment for any reason, whether voluntary or
involuntary, with or without Cause, Fort agrees that he shall not,
(i) Request, induce or attempt to induce any customer of World
to terminate any business relationship with World or to seek
to establish a similar business relationship with a person or
entity other than World;
(ii) Cause, encourage or in any way assist any person or
entity actively to solicit any aviation business from any
customer of World;
(iii) Induce or attempt to induce any of World's employees to
terminate their employment with World, or induce or attempt to
induce any of World's employees to provide aviation related
services for any other person, firm or organization;
(iv) Use any employer Confidential Information as set forth in
paragraph A of this Section or information which is not
otherwise available to the public at large for the purposes of
providing aviation related services for or through any person
or entity other than World.
Fort agrees that the restrictions set forth in this Agreement above are
reasonable, proper, and necessitated by legitimate business interests
of World and do not constitute an unlawful or unreasonable restraint
upon Fort's ability to earn a livelihood. The parties agree that in the
event any of the restrictions in this Agreement, interpreted in
accordance with the Agreement as a whole, are found to be unreasonable
by a court of competent jurisdiction, such court shall determine the
limits allowable by law and shall enforce the same. If the court
declines such enforcement, the parties agree that this agreement shall
be interpreted to provide World with the maximum protection allowed by
law.
(d) Fort acknowledges that it may be impossible to assess the monetary
damages incurred by his violation of this Agreement, or any of its
terms, and that any threatened or actual violation or breach of this
Agreement, or any of its terms, will constitute immediate and
irreparable injury to World. Therefore, Fort expressly agrees that in
addition to any and all other damages and remedies available to World
as a result of Fort's breach of this Agreement, World shall be entitled
to an injunction restraining Fort from violating or breaching this
Agreement, or any of its terms. In the event World enforces this
Agreement through Court Order, Fort agrees that the restrictions
contained in this Agreement shall remain in effect for a period of
twelve (12) consecutive months from the effective date of such Order
enforcing the Agreement.
7. BENEFICIARY. The Beneficiary of any payment due and payable at the time of
Fort's death, or otherwise due upon his death, shall be his wife, or such other
person or persons as Fort shall designate in writing to World. If no such
beneficiary shall survive Fort, any such payments shall be made to his estate.
8. INTELLECTUAL PROPERTY.
(a) Any improvements, new techniques, processes, products or
copyrightable materials made or conceived by Fort, either solely or
jointly with other person(s), (1) during Fort's period of employment by
World, during working hours; (2) during the period after
termination of his employment during which he is retained by World as a
consultant; or (3) with use of World's intellectual property or
confidential information, shall be the sole and exclusive property of
World without royalty or other consideration to Fort.
(b) Fort agrees to inform World promptly and in full of such
intellectual property by a full written report setting forth in detail
the procedures used and the results achieved.
(c) Fort shall at World's request and expense execute any and all
applications, assignments, or other instruments which World shall deem
necessary to apply for, register, and/or obtain copyrights or Letters
Patent of the United States or of any foreign country, or to otherwise
protect World's interests in such intellectual property.
(d) Fort shall assign and does hereby assign to World all interests and
rights, including but not limited to copyrights, in any such
intellectual property.
9. ARBITRATION. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, under the commercial
arbitration rules of the American Arbitration Association.
10. NO WAIVER. The failure of either party at any time to enforce any provisions
of this Agreement or to exercise any remedy, option, right, power or privilege
provided for herein, or to require the performance by the other party of any of
the provisions hereof, shall in no way be deemed a waiver of such provision at
the same or at any prior or subsequent time.
11. GOVERNING LAW. This Agreement is governed by and shall be construed in
accordance with the laws of the State of Virginia. Fort agrees to submit to
personal jurisdiction in the State of Virginia.
12. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
13. SUCCESSORS. This Agreement shall be binding upon World, its successors and
assigns, including any corporation or other business entity which may acquire
all or substantially all of World's assets or business, or within which World
may be consolidated or merged, or any surviving corporation in a merger
involving World.
14. WAIVER OF MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement shall be valid unless in writing and duly executed by both parties.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
WORLD AIRWAYS, INC.
By: ________________________________
Russell L. Ray, Jr.
President and CEO
________________________________
Vance Fort
EMPLOYMENT AGREEMENT
This Employment Agreement (hereinafter referred to as the "Agreement"), between
World Airways, Inc., a Delaware corporation (hereinafter referred to as "World"
or "the Company") and Hollis L. Harris hereinafter referred to as ("Harris") is
entered into this 15th day of April, 1999.
WHEREAS, Harris has agreed to serve as World's President, Chief Executive
Officer and Chairman of the Board of Directors, as of May 1, 1999.
NOW, THEREFORE, World and Harris, in consideration of the foregoing and other
mutual covenants and promises contained herein, the sufficiency of which are
hereby acknowledged, hereby agree as follows:
1. ACCEPTANCE OF EMPLOYMENT. Subject to the terms and conditions set forth
below, World agrees to employ Harris and Harris accepts such employment.
2. TERM. The period of employment shall be from May 1, 1999, through December
31, 2001, unless further extended or sooner terminated as hereinafter set forth.
In the absence of notice, this Agreement shall be renewed on the same terms and
conditions for one year from the date of expiration. Not later than June 30,
2000, Harris shall initiate discussions with the World Airways Board of
Directors (hereinafter "Board") regarding the renewal of this Agreement. At that
time, if Harris wishes to renew this Agreement on different terms, Harris shall
give written notice to the Chairman of the Executive Committee of the Board. If
the Board does not wish to renew this Agreement at its expiration, or wishes to
renew on different terms, the Board shall give written notice to Harris no later
than June 30, 2000.
3. POSITION AND DUTIES. Harris shall continue to serve as President, Chief
Executive Officer and Chairman of the Board with the duties performed as of May
1, 1999, as those duties may be changed from time to time. The Board will have
reasonable latitude to make changes in Harris' responsibilities, except that
Harris' responsibilities may not be modified in a way that would be inconsistent
with the status of President, Chief Executive Officer and Chairman of the Board.
Following a Change of Control (as hereinafter defined), Harris' responsibilities
may not be changed without mutual agreement. Harris agrees to render his
services to the best of his abilities and will comply with all policies, rules
and regulations of the company and will advance and promote to the best of his
ability the business and welfare of the Company. Harris shall devote all of his
working time, attention, knowledge and skills solely to the business and
interest of World. Harris may not accept any other engagement with or without
compensation which would affect his ability to devote all of his working time
and attention to the business and affairs of World without the prior written
approval of the Board pursuant to a resolution duly adopted by the affirmative
vote of a majority of the entire membership of the Board, excluding the vote of
Harris. Harris agrees to accept assignments on behalf of World or affiliated
companies commensurate with his responsibilities hereunder, except that the
terms and conditions of assignments exceeding 60 consecutive days outside the
Washington, DC metropolitan area will require mutual agreement.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Harris shall receive a minimum salary of $350,000 per
annum payable in accordance with the payroll procedures for World's
salaried employees in effect during the term of this Agreement.
(b) PERFORMANCE STOCK OPTIONS. Harris has been granted 100,000 options
to purchase World's Common Stock, par value $.001 per share ("World
Airways Common Stock") pursuant to the 1995 World Airways Stock Option
Plan (the "Plan") as set forth in the Stock Option Agreement between
World and Harris dated April 15, 1999 (the "Option Agreement No.1").
(c) PERFORMANCE STOCK OPTIONS. Harris has been granted 900,000 options
to purchase World Airways Common Stock, par value $.00l per share
pursuant to a stock option plan to be created in a reasonable time
frame by the Board (the "Option Agreement No. 2").
(d) Harris agrees to purchase $100,000.00 worth of common stock or
debentures of the Company.
(e) BUSINESS EXPENSES. Harris shall be entitled to reimbursement of
reasonable business related expenses from time to time consistent with
World's policies, including, without limitation, submitting in a timely
manner appropriate documentation of such expenses.
(f) FRINGE BENEFITS. Harris shall be entitled to participate in all
employee benefit plans made available from time to time to all
executives of World in accordance with the terms of such plans. In the
event this Agreement is terminated by either party for any reason other
than death or for cause, Harris may participate in World's health and
other benefit programs for a period of one year from the date of
Harris' termination, or until Harris obtains comparable coverage,
whichever is earlier.
(g) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as otherwise
provided herein, Harris' employment shall be subject to the personnel
policies and benefits plans which apply generally to World's employees
as the same may be interpreted, adopted, revised or deleted from time
to time, during the term of this Agreement, by World in its sole
discretion. While this Agreement is in effect, Harris shall accrue
vacation at the rate of one month per year and such vacation shall be
taken in accordance with the Company's procedures.
(h) INDEMNIFICATION; D&O INSURANCE. Subject to Section 6(f) of this
Agreement, World shall provide (or cause to be provided) to Harris
indemnification against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlements in connection with any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action
by or in the right of World) by reason of his being or having been an
officer, director or employee of World or any affiliated entity,
advance expenses (including attorneys' fees) incurred by Harris in
defending any such civil, criminal, administrative or investigative
action, suit or proceeding and maintain directors' and officers'
liability insurance coverage (including coverage for securities-related
claims) upon substantially the same terms and conditions as set forth
in the Indemnification Agreement dated April 15, 1999, between Harris
and World Airways, Inc. (the "Indemnity Agreement"). [TO DO]
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Harris' employment hereunder shall terminate upon his death,
in which event World shall have no further obligation to Harris or his
estate with respect to compensation, other than the disposition of life
insurance and related benefits and accrued and unpaid base salary and
incentive compensation, if any, for periods prior to the date of
termination pursuant to the terms of the respective employee benefits
and incentive compensation plans then in effect.
(b) BY WORLD FOR DISABILITY. If Harris incurs a disability and such
disability continues for a period of twelve (12) consecutive months,
then World may terminate this Agreement upon written notice to Harris,
in which event World shall have no obligation to Harris with respect to
compensation under Section 4(a) of this Agreement. The term
"disability" means a physical or mental illness that will prevent
Harris from performing the essential functions of his job for at least
twelve (12) months or is likely to result in death. If Harris becomes
entitled to Social Security benefits payable on account of disability,
he will be deemed conclusively to be disabled for purposes of this
Agreement.
(c) BY WORLD FOR CAUSE.
(i) Except under the circumstances set forth in 5(c)(ii)
below, the Chairman of the Executive Committee of the Board
pursuant to a resolution duly adopted by the affirmative vote
of a majority of the entire membership of the Board, excluding
the vote of Harris, at a meeting of the Board may terminate
this Agreement, subject to Section 6(f) and those provisions
that survive this Agreement, for Cause. "Cause" shall be
defined as (A) sustained performance deficiencies which are
communicated to Harris in written performance appraisals
and/or other written communications (including, but not
limited to memos and/or letters) by the
Chairman of the Executive Committee of the Board pursuant to a
resolution duly adopted by the affirmative vote of a majority
of the entire membership of the Board, excluding the vote of
Harris, (B) gross misconduct, including significant acts or
omissions constituting dishonesty, intentional wrongdoing or
malfeasance, whether or not relating to the business of World,
(C) commission of a felony or any crime involving fraud or
dishonesty, or (D) a material breach of this Agreement.
(ii) In the event of a Change of Control, as defined below,
Harris may only be terminated for Cause pursuant to a
resolution duly adopted pursuant to a resolution duly adopted
by the affirmative vote of a majority of the entire membership
of the Board, excluding the vote of Harris, at a meeting of
the Board finding that, in the good faith opinion of the
Board, Harris was guilty of conduct set forth in 5(c)(i)(A),
(B), (C) or (D) provided, however, that Harris may not be
terminated for Cause hereunder unless: (1) Harris receives
prior written notice of World's intention to terminate this
Agreement for Cause and the specific reasons therefore; and
(2) Harris has an opportunity to be heard by World's Board and
be given, if the acts are correctable, a reasonable
opportunity to correct the act or acts (or non-action) giving
rise to such written notice. If the Board by resolution duly
adopted by the affirmative vote of a majority of the entire
membership of the Board finds that Harris fails to make such
correction after reasonable opportunity to do so, this
Agreement may be terminated for Cause.
(d) BY WORLD FOR OTHER THAN CAUSE. In the event the Board terminates
this Agreement for reasons other than Cause or Disability as defined in
sub-paragraph (c) above, World will pay to Harris within ten (10) days
of notice of termination (or, in the case of incentive bonus
compensation, if any, within ten (10) days of determination of amounts
payable under the applicable bonus plan) twenty-four month's base
salary, in each case including deferred salary and/or bonus
compensation, if any, payable under this Agreement. In addition, all
granted but unvested stock options under the Option Agreements shall
become immediately exercisable. In the event that any payment to Harris
under this paragraph is subject to any federal or state excise tax,
World shall pay to Harris an additional amount equal to the excise tax
imposed including additional federal and state income and excise taxes
as a result of the payments under this paragraph, and such payment will
be made when the excise tax and income taxes are due; provided,
however, that Harris agrees to assist World Airways by using his best
efforts to structure matters so that any payment to Harris under this
paragraph is not subject to any federal or state excise tax. Whether an
excise tax is payable, and the amount of the excise tax and additional
income taxes payable, shall be determined by World's accountants and
World shall hold Harris harmless for any and all taxes, penalties, and
interest that may become due as a result of the failure to properly
determine that an excise tax is payable or the correct amount of the
excise tax and additional income taxes, together with all legal and
accounting fees reasonably incurred by Harris in connection with any
dispute with any taxing authority with respect to such determinations
and/or payments. In the event of a disagreement between World and
Harris as to whether the termination was for Cause, that issue shall be
submitted by Harris within twenty (20) days of the notice of
termination to binding arbitration, or any objection to World's
determination that termination is for Cause shall be waived.
(e) BY HARRIS FOR GOOD REASON. Harris may terminate his employment
hereunder (for purposes of this Agreement "Good Reason") after giving
at least 30 days notice in the event that, without Harris' consent: (i)
World relocates its general and administrative offices or Harris' place
of employment to an area other than the Washington, D.C. Standard
Metropolitan Statistical Area, (ii) he is assigned any duties
substantially inconsistent with Section 3 hereof, (iii) World reduces
his annual base salary as in effect on the date hereof or as the same
may be increased from time to time; (iv) World fails, without Harris'
consent, to pay Harris any portion of his current compensation, or to
pay him any portion of an installment of deferred compensation under
any deferred compensation program of World, within seven (7) days of
the date such compensation is due; (v) World fails to continue in
effect any compensation plan in which Harris participates which is
material to Harris' total compensation, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made
with respect to such plan, or to continue Harris' participation therein
(or in such substitute or alternative Plan) on a basis not materially
less favorable, both in terms of the amount of benefits provided and
the level of Harris' participation relative to other participants; (vi)
World fails to continue to provide Harris with benefits substantially
similar to those enjoyed by Harris under any of World's pension, life
insurance, medical, health and accident, or disability plans in which
Harris was participating, World takes any action which would directly
or indirectly materially reduce any of such benefits or deprive Harris
of any material fringe benefit enjoyed by Harris; (vii) World
terminates, or proposes to terminate, Harris' employment hereunder
contrary to the requirements of Section 5(c) hereof (for purposes of
this Agreement, no such termination or purported termination shall be
effective) and Harris has submitted the matter to arbitration, as set
forth in Section 5(d); or (viii) the Board approves the liquidation or
dissolution of World prior to the end of this Agreement. In the event
that Harris decides to terminate this Agreement and his employment with
World or any successor in interest in accordance with the provisions of
this Section 5(e), World shall have the same obligations as set forth
in Section 5(d) hereof. Any other payments due or actions required
under this paragraph shall be made as lump sums or taken within 10 days
of termination of the Agreement.
(f) By Harris for Other Than Good Reason. Notwithstanding the above,
Harris may upon giving reasonable notice, not to be less than six
months, terminate this Agreement without further obligation on the part
of Harris or World.
(g) CHANGES OF CONTROL. For purposes of this Agreement, a "Change of
Control" includes the occurrence of any one or more of the following
events:
(i) any Person, other than the Company, is or becomes the
Beneficial Owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, of securities of World
representing more than 50% of the combined voting power of
World's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board of World and any new director (other than
a director designated by a Person who has entered into an
agreement with World to effect a transaction described in
clause (i), (iii) or (iv) or this Section 5 (f)) whose
election by the Board of World or nomination for election by
the stockholders of World was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) the shareholders of World approve a merger or
consolidation of World with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of World outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or
being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of World or any of its affiliates, at least 50% of the
combined voting power of the voting securities of World or
such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of World (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of World's then outstanding securities;
or
(iv) the shareholders of World approve a plan of complete
liquidation of World or an agreement for the sale or
disposition by World of all or substantially all of World's
assets.
(h) "PERSON" DEFINED. For purposes of this Section, "Person" shall have
the meaning given in Section (3)(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) World or WorldCorp, Inc. or any of their subsidiaries
or affiliates; (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of World or WorldCorp, Inc. or any of
their subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation
owned, directly or indirectly, by the stockholders of World or
WorldCorp, Inc. in substantially the same proportions as their
ownership of stock of World or WorldCorp, Inc.
(i) NOTICE OF TERMINATION. Termination of this Agreement by World or
termination of this Agreement by Harris shall be communicated by
written notice to the other party hereto, specifically indicating the
termination provision relied upon.
(j) COMPANY PROPERTY. At the termination of Harris' employment, whether
voluntary or involuntary, Harris shall return all company property,
including without limitation all electronic and paper files and
documents and all copies thereof.
6. CONFIDENTIALITY/RESTRICTIVE COVENANT.
(a) Harris recognizes and acknowledges that he will acquire during his
employment with World information that is confidential to World and
that represents valuable, special and unique assets of World
("Confidential Information"). Such Confidential Information (whether or
not reduced to tangible form) includes, but is not limited to: trade
secrets; financing documents and information; financial data; new
product information; copyrights; information relating to schedules and
locations; cost and pricing information; performance features; business
techniques; business methods; business and marketing plans or
strategies; business dealings and arrangements; business objectives;
customer information; sales information; acquisition, merger or
business development plans or strategies; research and development
projects; legal documents and information; personnel information; and
any and all other information concerning World's business and business
practices that is not generally known or made available to the public
or to World's competitors which, if misused or disclosed, could
adversely affect the business of World. Harris agrees that he will not,
during employment with World and for a period of two (2) years
following termination of employment for any reason, whether voluntary
or involuntary, with or without Cause, directly or indirectly:
(i) disclose any Confidential Information to any person,
company or other entity (other than authorized persons
employed by or affiliated with World who, in the interest of
World, have a business need to know such information), or
(ii) use any Confidential Information in any way, except as
required by his duties to World or by law, unless he obtains
World's prior written approval of such disclosure or use.
World's rights under this Section shall be cumulative to, and
shall not limit, World's rights under the Virginia Uniform
Trade Secrets Act or any other state or federal trade secret
or unfair competition statute or law. The parties hereto
stipulate that as between them, the foregoing matters are
important, material, and confidential and gravely affect the
successful conduct of the business of World, and World's good
will, and that any breach of the terms of this paragraph shall
be a material breach of this Agreement.
(b) While employed by World and for a period of two (2) years following
termination of employment for any reason, whether voluntary or
involuntary, with or without Cause, Harris agrees that he will not,
directly or indirectly, either as principal, agent, employee, employer,
owner, stockholder (owning more than 5% of a corporation's shares),
partner, contractor, consultant or in any other individual or
representative capacity:
(i) Request, induce or attempt to induce any customer of
World: (A) to terminate or curtail any business relationship
with World or (B) to establish or attempt to establish a
similar business relationship with a person or entity other
than World;
(ii) Solicit, cause, encourage or in any way assist any person
or entity to solicit, any aviation business from any person or
entity who at such time is, or within the preceding twelve
(12) months, had been a customer of World, unless such
customer of World was also already a customer of such other
person or entity on the date of Harris' termination;
(iii) Induce or attempt to induce any of World's officers,
directors, or employees to terminate their employment or
relationship with World, or induce or attempt to induce any
such persons to provide aviation-related services or services
similar to those they provide for World for any other person,
firm or organization.
(c) Harris agrees that the restrictions set forth in this Agreement are
reasonable, proper, and necessitated by legitimate business interests
of World and do not constitute an unlawful or unreasonable restraint
upon Harris' ability to earn a livelihood. The parties agree that in
the event any of the restrictions in this Agreement are found to be
overbroad or unreasonable by a tribunal or court of competent
jurisdiction, the parties agree that this Agreement should be enforced
to the maximum extent allowed by applicable law, and the parties
authorize and request such court or tribunal to determine the maximum
time, geographic area, activity and other applicable limitations
allowable by law and to reform the applicable provisions to such
maximum limitations.
(d) Harris acknowledges that it may be impossible to assess the
monetary damages incurred by his violation of this Agreement, or any of
its terms, and that any threatened or actual violation or breach of
this Agreement, or any of its terms, will constitute immediate and
irreparable injury to World. Therefore, Harris expressly agrees that,
in addition to any and all monetary damages and other remedies and
relief available to World as a result of Harris' violation or breach of
this Agreement, World shall be entitled to an injunction restraining
Harris from violating or breaching this Agreement, or any of its terms
(and no bond or other security will be required in connection
therewith); World will be entitled to specific performance of this
Agreement; and World will be entitled to recover its reasonable
attorneys' fees and costs incurred to enforce, or prosecute or defend
any action relating to, this Agreement. In the event World enforces
this Agreement through court order or other decree, Harris agrees that
the restrictions contained in this Agreement shall remain in effect for
a period of twenty four (24) consecutive months from the effective date
of such order or decree enforcing the Agreement.
(e) Section 9 of this Agreement, relating to arbitration, shall not
apply to this Section 6. The parties agree that any dispute between
them relating to or involving this Section 6, including without
limitation, any question concerning the construction, validity,
application, interpretation or alleged breach or threatened breach of
this Section 6, shall be litigated in a court in the Commonwealth of
Virginia.
(f) Section 4(h) of this Agreement and any other indemnity agreements
between Harris and World shall not apply to actions, suits or
proceedings to enforce World's rights under, or that otherwise relate
to, this Agreement, including without limitation, this Section 6.
(g) References in this Section 6 to "World" include World Airways, Inc.
and any and all of its current or future parents, subsidiaries,
affiliated companies, and divisions.
7. BENEFICIARY. The Beneficiary of any payment due and payable at the time of
Harris' death, or otherwise due upon his death, shall be such person or persons
as Harris shall designate in writing to World. If no such beneficiary shall
survive Harris, any such payments shall be made to his estate.
8. INTELLECTUAL PROPERTY.
(a) Any improvements, new techniques, processes, inventions, works,
discoveries, products or copyrightable or patentable materials made or
conceived by Harris, either solely or jointly with other person(s), (1)
during Harris' period of employment by World, during working hours; (2)
during the period after termination of his employment during which he
is retained by World as a consultant; or (3) with use of World's
intellectual property or Confidential Information, shall be the sole
and exclusive property of World without royalty or other consideration
to Harris.
(b) Harris agrees to inform World promptly and in full of such
intellectual property by a full written report setting forth in detail
the procedures used and the results achieved.
(c) Harris shall at World's request and expense execute any and all
applications, assignments, or other instruments which World shall deem
necessary to apply for, register, and/or obtain copyrights or Letters
Patent of the United States or of any foreign country, or to otherwise
protect World's interests in such intellectual property.
(d) Harris shall assign and does hereby assign to World all interests
and rights, including but not limited to copyrights, in any such
intellectual property.
9. ARBITRATION. Except as described in Section 6, above, any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration, under the commercial arbitration rules of the
American Arbitration Association. The prevailing party in any such arbitration,
or any court action to enforce or vacate an arbitration award, shall be entitled
to its costs and reasonable attorneys fees from the other party.
10. NO WAIVER. The failure of either party at any time to enforce any provisions
of this Agreement or to exercise any remedy, option, right, power or privilege
provided for herein, or to require the performance by the other party of any of
the provisions hereof, shall in no way be deemed a waiver of such provision at
the same or at any prior or subsequent time.
11. GOVERNING LAW. All questions concerning the construction, validity,
application and interpretation of this Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia without giving
effect to any choice of law or conflict of law provision or rule (whether of
Virginia or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than Virginia. Harris agrees to submit to personal
jurisdiction in the State of Virginia.
12. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
13. SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon
World, its successors and assigns, including any corporation or other business
entity which may acquire all or substantially all of World's assets or business,
or within which World may be consolidated or merged, or any surviving
corporation in a merger involving World.
14. WAIVER OF MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement shall be valid unless in writing and duly executed by both parties.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
WORLD AIRWAYS, INC.
By: ________________________________
Russell L. Ray, Jr.
Chairman, President and CEO
________________________________
Hollis L. Harris
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This is Amendment No. 1 ("Amendment No. 1") to that certain Employment Agreement
dated as of October 1, 1996, between World Airways, Inc., a Delaware corporation
("World") and Ahmad M. Khatib ("Khatib"), (the "Agreement").
WHEREAS, Pursuant to Section 4 (d) of the Agreement Mr. Khatib is required to
hold a certain amount of any combination of the common stock of World Airways
and/or WorldCorp; and
WHEREAS, it is the intention of the parties that shares of common stock of World
Airways and WorldCorp allocated to Mr. Khatib's ESSOP account be counted toward
meeting the stock ownership requirement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged,, the parties to this Amendment No. 1 agree as
follows:
1. The Agreement is hereby amended so that the sentence beginning on line
five, beginning "For purposes..." is restated as follows:
For purposes of this Agreement, any shares of World Airways Common
Stock or WorldCorp Common Stock (i) allocated to Mr. Khatib's ESSOP
account, (ii) owned by members of Khatib's immediate family (i.e.,
spouse, sons or daughters), or (iii) a revocable grantor trust of which
he is the grantor, shall be counted towards Khatib's stock ownership
and holding requirements.
2. Except as expressly amended herein, the Agreement, as amended through
the date hereof, and each and every provision thereof, remains in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 this 30th day
of April, 1997.
WORLD AIRWAYS, INC.
By:______________________________
Russell L. Ray, Jr.
President and CEO
______________________________
Ahmad M. Khatib
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of April 22,
1999 (the "Agreement"), is by and between World Airways, Inc., a Delaware
corporation, its successors and assigns (hereinafter "World") and William R.
Lange (Lange).
WHEREAS, World and Lange wish to amend the Employment Agreement between
themselves dated as of June 9, 1997; and
WHEREAS, Lange has agreed to serve as a member of World's senior management team
in charge of Strategic Planning as of the date hereof;
NOW, THEREFORE, World and Lange in consideration of the mutual covenants and
promises contained herein, do hereby agree as follows:
1. ACCEPTANCE OF EMPLOYMENT. Subject to the terms and conditions set forth
below, World agrees to continue to employ Lange in the above described new
position and Lange accepts such employment.
2. TERM. The period of employment shall be from the date first written above
through December 31, 1999, unless further extended or sooner terminated as
hereinafter set forth. Not later than June 15th of each year, Lange shall
initiate discussions with the President and CEO regarding the renewal of the
Agreement. If World does not wish to renew this Agreement at its expiration, or
wishes to renew on different terms, World shall give written notice to Lange by
June 30th of each year. If Lange does not wish to renew this Agreement at its
expiration, or wishes to renew on different terms, Lange shall give written
notice to World by June 30th of each year. In the absence of notice, this
Agreement shall be renewed on the same terms and conditions for successive terms
of one year from the date of expiration.
3. POSITION AND DUTIES. Lange shall serve as World's senior executive of
Strategic Planning with the duties performed as of the date hereof, which duties
and responsibilities will include fleet planning, providing analysis and
development of corporate strategy (Strategy), selling of the Strategy to
internal and external stakeholders, developing corporate plans (Plans) to
implement the strategy, and monitoring the implementation of the Strategy and
Plans. The President and CEO will have reasonable latitude to make changes in
Lange's responsibilities, except that Lange's responsibilities may not be
modified in a way that would be inconsistent with the status of a company
executive. Following a Change of Control (as hereinafter defined), Lange's
responsibilities may not be changed without mutual agreement. Lange agrees to
render his services to the best of his abilities and will comply with all
policies, rules and regulations of the company and will advance and promote to
the best of his ability the business and welfare of the company. Lange shall
devote all of his working time, attention, knowledge and skills solely to the
business and interest of World. Lange may not accept any other engagement with
or without compensation which would affect his ability to devote all of his
working time and attention to the business and affairs of World without the
prior written approval of the President and CEO. Lange agrees to accept
assignments on behalf of World or affiliated companies commensurate with his
responsibilities hereunder, except that the terms and conditions of assignments
exceeding 60 consecutive days outside the Washington, D.C. metropolitan area
will require mutual agreement.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Lange shall receive a minimum salary of $170,000 per
annum payable in accordance with the payroll procedures for World's
salaried employees in effect during the term of this Agreement. Lange
agrees to participate equally, on a percentage basis, in any across the
board salary reductions approved by senior management.
(b) ELIGIBILITY FOR BONUSES. Lange shall be eligible to receive an
annual bonus pursuant to World's management incentive compensation
plan, if any, as the Board of Directors may adopt from time to time.
(c) PERFORMANCE STOCK OPTIONS. Lange has been granted options to
purchase World's Common Stock, par value $.001 per share ("World
Airways Common Stock") pursuant to the 1995 World Airways Stock Option
Plan (the "Plan") as set forth in the Stock Option Agreement between
World and Lange dated June 9, 1997 (the "Option Agreement").
(d) BUSINESS EXPENSES. Lange shall be entitled to reimbursement of
reasonable business related expenses from time to time consistent with
World's policies, including, without limitation, submitting in a timely
manner appropriate documentation of such expenses.
(e) FRINGE BENEFITS. Lange shall be entitled to participate in all
employee benefit plans made available from time to time to all
executives of World in accordance with the terms of such plans.
(f) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as otherwise
provided herein, Lange's employment shall be subject to the personnel
policies and benefits plans which apply generally to World's employees
as the same may be interpreted, adopted, revised or deleted from time
to time, during the term of this Agreement, by World in its sole
discretion. While this Agreement is in effect, Lange shall accrue
vacation at the rate of one month per year and such vacation shall be
taken in accordance with the Company's procedures.
(g) INDEMNIFICATION; D&O INSURANCE. Subject to Section 9(f) of this
Agreement, World shall provide (or cause to be provided) to Lange
indemnification against all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlements in connection with any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action
by or in the right of World) by reason of his being or having been an
officer, director or employee of World or any affiliated entity,
advance expenses (including attorneys' fees) incurred by Lange in
defending any such civil, criminal, administrative or investigative
action, suit or proceeding and maintain directors' and officers'
liability insurance coverage (including coverage for securities-related
claims) upon substantially the same terms and conditions as set forth
in the Indemnification Agreement of even date herewith between Lange
and World Airways, Inc. (the "Indemnity Agreement").
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Lange's employment hereunder shall terminate upon his death,
in which event World shall have no further obligation to Lange or his
estate with respect to compensation, other than the disposition of life
insurance and related benefits and accrued and unpaid base salary and
incentive compensation for periods prior to the date of termination, if
any, pursuant to the terms of the respective employee benefits and
incentive compensation plans then in effect.
(b) BY WORLD FOR DISABILITY. If Lange incurs a disability and such
disability continues for a period of twelve (12) consecutive months,
then World may terminate this Agreement upon written notice to Lange,
in which event World shall have no obligation to Lange with respect to
compensation under Section 4(a) of this Agreement. The term
"disability" means a physical or mental illness that will prevent Lange
from performing the essential functions of his job for at least twelve
(12) months or is likely to result in death. If Lange becomes entitled
to Social Security benefits payable on account of disability, he will
be deemed conclusively to be disabled for purposes of this Agreement.
c) BY WORLD FOR CAUSE.
(i) Except under the circumstances set forth in 5(c)(ii)
below, the President and CEO of World may terminate this
Agreement, subject to Section 9(f) and those provisions that
survive this Agreement, for Cause. "Cause" shall be defined as
(A) sustained performance deficiencies which are communicated
to Lange in written performance appraisals and/or other
written communications (including, but not limited to memos
and/or letters) by the President and CEO of World, (B) gross
misconduct, including significant acts or omissions
constituting dishonesty, intentional wrongdoing or
malfeasance, whether or not relating to the business of World,
C) commission of a felony or any crime involving fraud or
dishonesty, or (D) a material breach of this Agreement.
(ii) In the event of a Change of Control, as defined below,
Lange may only be terminated for Cause pursuant to a
resolution duly adopted by the affirmative vote
of a majority of the entire membership of the Board at a
meeting of the Board finding that, in the good faith opinion
of the Board, Lange was guilty of conduct set forth in
5(c)(i)(A), (B), (C) or (D) provided, however, that Lange may
not be terminated for Cause hereunder unless: (1) Lange
receives prior written notice of World's intention to
terminate this Agreement for Cause and the specific reasons
therefor; and (2) Lange has an opportunity to be heard by
World's Board of Directors and be given, if the acts are
correctable, a reasonable opportunity to correct the act or
acts (or non-action) giving rise to such written notice. If
the Board by resolution duly adopted by the affirmative vote
of a majority of the entire membership of the Board finds that
Lange fails to make such correction after reasonable
opportunity to do so, this Agreement may be terminated for
Cause.
(d) BY WORLD FOR OTHER THAN CAUSE. In the event the Board of Directors
terminates this Agreement for reasons other than Cause or Disability as
defined in sub-paragraph (c) above, World will pay to Lange within ten
(10) days of notice of termination (or, in the case of incentive bonus
compensation, within ten (10) days of determination of amounts payable
under the applicable bonus plan) the greater of eighteen months base
salary, or the undiscounted remainder of his base salary, in each case
including deferred salary and/or bonus compensation, payable under this
Agreement. In addition, all granted but unvested stock options under
the Option Agreement shall become immediately exercisable. In the event
that any payment to Lange under this paragraph is subject to any
federal or state excise tax, World shall pay to Lange an additional
amount equal to the excise tax imposed including additional federal and
state income and excise taxes as a result of the payments under this
paragraph, and such payment will be made when the excise tax and income
taxes are due; provided, however, that Lange agrees to assist World
Airways by using his best efforts to structure matters so that any
payment to Lange under this paragraph is not subject to any federal or
state excise tax. Whether an excise tax is payable, and the amount of
the excise tax and additional income taxes payable, shall be determined
by World's accountants and World shall hold Lange harmless for any and
all taxes, penalties, and interest that may become due as a result of
the failure to properly determine that an excise tax is payable or the
correct amount of the excise tax and additional income taxes, together
with all legal and accounting fees reasonably incurred by Lange in
connection with any dispute with any taxing authority with respect to
such determinations and/or payments. In the event of a disagreement
between World and Lange as to whether the termination was for Cause,
that issue shall be submitted by Lange within twenty (20) days of the
notice of termination to binding arbitration, or any objection to
World's determination that termination is for Cause shall be waived.
(e) BY LANGE FOR GOOD REASON. Lange may terminate his employment
hereunder (for purposes of this Agreement "Good Reason") after giving
at least 30 days notice in the event that, without Lange's consent: (i)
World relocates its general and administrative offices or Lange's place
of employment to an area other than the Washington, D.C.
Standard Metropolitan Statistical Area, (ii) he is assigned any duties
substantially inconsistent with Section 3 hereof, (iii) World reduces
his annual base salary as in effect on the date hereof or as the same
may be increased from time to time, except as provided in Section 4(a)
herein; (iv) World fails, without Lange's consent, to pay Lange any
portion of his current compensation, or to pay him any portion of an
installment of deferred compensation under any deferred compensation
program of World, within seven (7) days of the date such compensation
is due; (v) World fails to continue in effect any compensation plan in
which Lange participates which is material to Lange's total
compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such
plan, or to continue Lange's participation therein (or in such
substitute or alternative Plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided and the
level of Lange's participation relative to other participants; (vi)
World fails to continue to provide Lange with benefits substantially
similar to those enjoyed by Lange under any of World's pension, life
insurance, medical, health and accident, or disability plans in which
Lange was participating, World takes any action which would directly or
indirectly materially reduce any of such benefits or deprive Lange of
any material fringe benefit enjoyed by Lange, or World fails to provide
Lange with the number of paid vacation days to which Lange is entitled
hereunder; (vii) World terminates, or proposes to terminate, Lange's
employment hereunder contrary to the requirements of Section 5(c)
hereof (for purposes of this Agreement, no such termination or
purported termination shall be effective) and Lange has submitted the
matter to arbitration, as set forth in Section 5(d); or (viii) the
Board approves the liquidation or dissolution of World prior to the end
of this Agreement. In the event that Lange decides to terminate this
Agreement and his employment with World or any successor in interest in
accordance with the provisions of this Section 5(e), World shall have
the same obligations as set forth in Section 5(d) hereof. Any other
payments due or actions required under this paragraph shall be made as
lump sums or taken within 10 days of termination of the Agreement.
(f) BY LANGE FOR OTHER THAN GOOD REASON. Notwithstanding the above,
Lange may upon giving reasonable notice, not to be less than 30 days,
terminate this Agreement without further obligation on the part of
Lange or World.
6. CHANGES OF CONTROL.
(a) For purposes of this Agreement, a "Change of Control" includes the
occurrence of any one or more of the following events:
(i) any Person is or becomes the Beneficial Owner (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), directly or indirectly, of
securities of World representing more than 50% of the combined
voting power of World's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the Board of World and any new director (other than
a director designated by a Person who has entered into an
agreement with World to effect a transaction described in
clause (i), (iii) or (iv) or this Section 5 (f)) whose
election by the Board of World or nomination for election by
the stockholders of World was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(iii) the shareholders of World approve a merger or
consolidation of World with any other corporation, other than
(A) a merger or consolidation which would result in the voting
securities of World outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or
being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit
plan of World or any of its affiliates, at least 50% of the
combined voting power of the voting securities of World or
such surviving entity outstanding immediately after such
merger or consolidation, or (B) a merger or consolidation
effected to implement a recapitalization of World (or similar
transaction) in which no Person acquires more than 50% of the
combined voting power of World's then outstanding securities;
or
(iv) the shareholders of World approve a plan of complete
liquidation of World or an agreement for the sale or
disposition by World of all or substantially all of World's
assets.
(b) "PERSON" DEFINED. For purposes of this Section, "Person" shall have
the meaning given in Section (3)(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof; however, a Person shall
not include (i) World or WorldCorp, Inc. or any of their subsidiaries
or affiliates; (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of World or WorldCorp, Inc. or any of
their subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation
owned, directly or indirectly, by the stockholders of World or
WorldCorp, Inc. in substantially the same proportions as their
ownership of stock of World or WorldCorp, Inc.
7. NOTICE OF TERMINATION. Termination of this Agreement by World or termination
of this Agreement by Lange shall be communicated by written notice to the other
party hereto, specifically indicating the termination provision relied upon.
8. COMPANY PROPERTY. At the termination of Lange's employment, whether voluntary
or involuntary, Lange shall return all company property, including without
limitation all electronic and paper files and documents and all copies thereof.
9. CONFIDENTIALITY/RESTRICTIVE COVENANT.
(a) Lange recognizes and acknowledges that he will acquire during his
employment with World information that is confidential to World and
that represents valuable, special and unique assets of World
("Confidential Information"). Such Confidential Information (whether or
not reduced to tangible form) includes, but is not limited to: trade
secrets; financing documents and information; financial data; new
product information; copyrights; information relating to schedules and
locations; cost and pricing information; performance features; business
techniques; business methods; business and marketing plans or
strategies; business dealings and arrangements; business objectives;
customer information; sales information; acquisition, merger or
business development plans or strategies; research and development
projects; legal documents and information; personnel information; and
any and all other information concerning World's business and business
practices that is not generally known or made available to the public
or to World's competitors which, if misused or disclosed, could
adversely affect the business of World. Lange agrees that he will not,
during employment with World and for a period of two (2) years
following termination of employment for any reason, whether voluntary
or involuntary, with or without Cause, directly or indirectly:
(i) disclose any Confidential Information to any person,
company or other entity (other than authorized persons
employed by or affiliated with World who, in the interest of
World, have a business need to know such information), or
(ii) use any Confidential Information in any way, except as
required by his duties to World or by law, unless he obtains
World's prior written approval of such disclosure or use.
World's rights under this Section shall be cumulative to, and
shall not limit, World's rights under the Virginia Uniform
Trade Secrets Act or any other state or federal trade secret
or unfair competition statute or law. The parties hereto
stipulate that as between them, the foregoing matters are
important, material, and confidential and gravely affect the
successful conduct of the business of World, and World's good
will, and that any breach of the terms of this paragraph shall
be a material breach of this Agreement.
(b) While employed by World and for a period of two (2) years following
termination of employment for any reason, whether voluntary or
involuntary, with or without Cause, Lange agrees that he will not,
directly or indirectly, either as principal, agent, employee, employer,
owner, stockholder (owning more than 5% of a corporation's shares),
partner, contractor, consultant or in any other individual or
representative capacity:
(i) Request, induce or attempt to induce any customer of
World: (A) to terminate or curtail any business relationship
with World or (B) to establish or attempt to establish a
similar business relationship with a person or entity other
than World;
(ii) Solicit, cause, encourage or in any way assist any person
or entity to solicit, any aviation business from any person or
entity who at such time is, or within the preceding twelve
(12) months, had been a customer of World, unless such
customer of World was also already a customer of such other
person or entity on the date of Lange's termination;
(iii) Induce or attempt to induce any of World's officers,
directors, or employees to terminate their employment or
relationship with World, or induce or attempt to induce any
such persons to provide aviation-related services or services
similar to those they provide for World for any other person,
firm or organization.
(c) Lange agrees that the restrictions set forth in this Agreement are
reasonable, proper, and necessitated by legitimate business interests
of World and do not constitute an unlawful or unreasonable restraint
upon Lange's ability to earn a livelihood. The parties agree that in
the event any of the restrictions in this Agreement are found to be
overbroad or unreasonable by a tribunal or court of competent
jurisdiction, the parties agree that this Agreement should be enforced
to the maximum extent allowed by applicable law, and the parties
authorize and request such court or tribunal to determine the maximum
time, geographic area, activity and other applicable limitations
allowable by law and to reform the applicable provisions to such
maximum limitations.
(d) Lange acknowledges that it may be impossible to assess the monetary
damages incurred by his violation of this Agreement, or any of its
terms, and that any threatened or actual violation or breach of this
Agreement, or any of its terms, will constitute immediate and
irreparable injury to World. Therefore, Lange expressly agrees that, in
addition to any and all monetary damages and other remedies and relief
available to World as a result of Lange's violation or breach of this
Agreement, World shall be entitled to an injunction restraining Lange
from violating or breaching this Agreement, or any of its terms (and no
bond or other security will be required in connection therewith); World
will be entitled to specific performance of this Agreement; and World
will be entitled to recover its reasonable attorneys' fees and costs
incurred to enforce, or prosecute or defend any action relating to,
this Agreement. In the event World enforces this Agreement through
court order or other decree, Lange agrees that the restrictions
contained in this Agreement shall remain in effect for a period of
twenty four (24) consecutive months from the effective date of such
order or decree enforcing the Agreement.
(e) Section 12 of this Agreement, relating to arbitration, shall not
apply to this Section 9. The parties agree that any dispute between
them relating to or involving this Section 9, including without
limitation, any question concerning the construction, validity,
application, interpretation or alleged breach or threatened breach of
this Section 9, shall be litigated in a court in the Commonwealth of
Virginia.
(f) Section 4(h) of this Agreement and any other indemnity agreements
between Lange and World shall not apply to actions, suits or
proceedings to enforce World's rights under, or that otherwise relate
to, this Agreement, including without limitation, this Section 9.
(g) References in this Section 9 to "World" include World Airways, Inc.
and any and all of its current or future parents, subsidiaries,
affiliated companies, and divisions.
10. BENEFICIARY. The Beneficiary of any payment due and payable at the time of
Lange's death, or otherwise due upon his death, shall be such person or persons
as Lange shall designate in writing to World. If no such beneficiary shall
survive Lange, any such payments shall be made to his estate.
11. INTELLECTUAL PROPERTY.
(a) Any improvements, new techniques, processes, inventions, works,
discoveries, products or copyrightable or patentable materials made or
conceived by Lange, either solely or jointly with other person(s), (1)
during Lange's period of employment by World, during working hours; (2)
during the period after termination of his employment during which he
is retained by World as a consultant; or (3) with use of World's
intellectual property or Confidential Information, shall be the sole
and exclusive property of World without royalty or other consideration
to Lange.
(b) Lange agrees to inform World promptly and in full of such
intellectual property by a full written report setting forth in detail
the procedures used and the results achieved.
(c) Lange shall at World's request and expense execute any and all
applications, assignments, or other instruments which World shall deem
necessary to apply for, register, and/or obtain copyrights or Letters
Patent of the United States or of any foreign country, or to otherwise
protect World's interests in such intellectual property.
(d) Lange shall assign and does hereby assign to World all interests
and rights, including but not limited to copyrights, in any such
intellectual property.
12. ARBITRATION. Except as described in Section 9, above, any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration, under the commercial arbitration rules of the
American Arbitration Association. The prevailing party in any such arbitration,
or any court action to enforce or vacate an arbitration award, shall be entitled
to its costs and reasonable attorneys fees from the other party.
13. NO WAIVER. The failure of either party at any time to enforce any provisions
of this Agreement or to exercise any remedy, option, right, power or privilege
provided for herein, or to require the performance by the other party of any of
the provisions hereof, shall in no way be deemed a waiver of such provision at
the same or at any prior or subsequent time.
14. GOVERNING LAW. All questions concerning the construction, validity,
application and interpretation of this Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia without giving
effect to any choice of law or conflict of law provision or rule (whether of
Virginia or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than Virginia. Lange agrees to submit to personal
jurisdiction in the State of Virginia.
15. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
16. SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon
World, its successors and assigns, including any corporation or other business
entity which may acquire all or substantially all of World's assets or business,
or within which World may be consolidated or merged, or any surviving
corporation in a merger involving World.
17. WAIVER OR MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement shall be valid unless in writing and duly executed by both parties.
18. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
WORLD AIRWAYS, INC.
By: ________________________________
Russell L. Ray, Jr.
President and CEO
________________________________
William R. Lange
